Consider the following production and cost data for two products,Q and P:
A total of 24,000 machine minutes are available each period and there is unlimited demand for each product.What is the largest possible total contribution margin that can be realized each period?
A)$120,000
B)$144,000
C)$456,000
D)$132,000

Question

Quizplus · Accepted Answer

11eaa3fe_343f_f9d2_908b_6bb9758a69ee_TB2461_00 Because there is unlimited demand for each product,all of the available capacity should be used to produce Product P.
Production of Product P = 24,000 machine minutes ÷ 6 machine-minutes per unit = 4,000 units
Total contribution margin = $36 per unit × 4,000 units = $144,000

Consider the Following Production and Cost Data for Two Products,Q