Wyandott Co.produces two products.Both products pass through a firing process that is operating at full capacity and is a production bottleneck.Product A requires 2 hours of processing and has a contribution margin per unit of $60.Product B requires 1 hour of processing and has a contribution margin of $40.Which of the following provides the most accurate assessment of the situation assuming unlimited demand for each product?
A) Production of Product B rather than Product A will generate the maximum profitability for Wyandotte.
B) Production of Product A rather than Product B will generate the maximum profitability for Wyandotte.
C) Raising the selling price of Product B by $20 will cause management to be indifferent between producing Product A or Product B.
D) Raising the selling price of Product A by $10 will cause management to be indifferent between producing Product A or Product B.

Question

Quizplus · Accepted Answer

Product B generates a higher contribution margin per hour ($40 per hour) compared to Product A ($30 per hour, calculated as $60/2 hours), making it more profitable to produce given the bottleneck constraint.