Figure 20-4 Montgomery Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
Refer to Figure 20-4. What is the constraint on machine hours for Montgomery Company?
A) 2A + 5B £ 500
B) 2A + 5B £ 300
C) 6A + 3B £ 500
D) 40A + 30B £ 500

Question

Figure 20-4 Montgomery Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
 Refer to Figure 20-4. What is the constraint on machine hours for Montgomery Company?
A) 2A + 5B £ 500 
B) 2A + 5B £ 300 
C) 6A + 3B £ 500 
D) 40A + 30B £ 500

Quizplus · Accepted Answer

The constraint on machine hours is represented by the equation 2A + 5B ≤ 300. This is because the company only has 300 machine hours available for production and producing one unit of A requires 2 machine hours, while producing one unit of B requires 5 machine hours. Therefore, the company can produce up to 150 units of A and 60 units of B, which satisfies the machine hour constraint while also maximizing total contribution margin.

Figure 20-4 Montgomery Company Produces a and B with Contribution