JK Company can sell all of the plush and supreme products it can produce,but it has limited production capacity.It can produce 4 plush units per hour or 2 supreme units per hour,and it has 2,000 production hours available.Contribution margin per unit is $214 for the plush product and $300 for the supreme product.What is the most profitable sales mix for JK Company?
A)0 plush units and 4,000 supreme units.
B)4,000 plush units and 4,000 supreme units.
C)8,000 plush units and 0 supreme units.
D)8,000 plush units and 4,000 supreme units.
E)4,000 plush units and 2,000 supreme units.

Question

Quizplus · Accepted Answer

Given the limited production capacity, JK Company should aim to maximize its contribution margin. Producing plush units yields a higher total contribution margin than producing supreme units when considering the production capacity and contribution margin per unit. Producing 4 plush units per hour for 2,000 hours results in 8,000 plush units, maximizing the use of available production hours and achieving the highest possible contribution margin.

JK Company Can Sell All of the Plush and Supreme