Products Square,Rect,Tri,and Quatro have contribution margins of $5,$8,$6,and $4,respectively,and require 3.5,2.5,2,and 3 machine hours per unit,respectively.Assuming that all units produced could be sold and that total machine hours per month are limited,on which product should the company concentrate its efforts?
A)Square
B)Rect
C)Tri
D)Quatro

Question

Quizplus · Accepted Answer

To determine which product the company should concentrate its efforts on, we need to calculate the contribution margin per machine hour for each product. This will allow us to see which product generates the most profit per hour of machine time.

- Square: Contribution margin of $5 per unit ÷ 3.5 machine hours per unit = $1.43 per hour
- Rect: Contribution margin of $8 per unit ÷ 2.5 machine hours per unit = $3.20 per hour
- Tri: Contribution margin of $6 per unit ÷ 2 machine hours per unit = $3.00 per hour
- Quatro: Contribution margin of $4 per unit ÷ 3 machine hours per unit = $1.33 per hour

Based on these calculations, it is clear that the company should concentrate its efforts on producing Rect, as it generates the highest contribution margin per machine hour at $3.20. This means that the company can earn more profit for each hour of machine time spent producing Rect compared to the other products.

Products Square,Rect,Tri,and Quatro Have Contribution Margins of $5,$8,$6,and $4,respectively,and Require