Brooks Corporation can sell all the units it can produce of either Plain or Fancy but not both.Plain has a unit contribution margin of $120 and takes two machine hours to make and Fancy has a unit contribution margin of $150 and takes three machine hours to make.There are 2,400 machine hours available to manufacture a product.What should Brooks do?
A)Make Fancy which creates $30 more profit per unit than Plain does.
B)Make Plain which creates $10 more profit per machine hour than Fancy does.
C)Make Plain because more units can be made and sold than Fancy.
D)The same total profits exist regardless of which product is made.

Question

Quizplus · Accepted Answer

The contribution margin per machine hour for Plain is $60 ($120/2 hours), while for Fancy it is $50 ($150/3 hours). Therefore, Plain generates more profit per machine hour.

Brooks Corporation Can Sell All the Units It Can Produce