Product A has a contribution margin of N$8 per unit, a contribution margin ratio of 50%, and requires 4 machine-hours to produce. Product B has a contribution margin of N$12 per unit, a contribution margin ratio of 40%, and requires 5 machine-hours to produce. If the constraint is machine-hours, then the company should produce and sell:

Question

Product A has a contribution margin of N$8 per unit, a contribution margin ratio of 50%, and requires 4 machine-hours to produce.    Product B has a contribution margin of N$12 per unit, a contribution margin ratio of 40%, and requires 5 machine-hours to produce.    If the constraint is machine-hours, then the company should produce and sell:

Answer

Product A since it requires fewer machine-hours per unit than does product B

Answer

Product B since it has the highest contribution margin per machine-hour

Answer

Product B since it has the highest contribution margin per unit

Answer

Product A since it has the highest contribution margin ratio

Answer

None of the other listed answers

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Product A has a contribution margin of N$8 per unit, a contribution margin ratio...

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