a company produces two products. product a sells for $25, has variable costs of $15, requires 2 machine hours to produce, and the market is limited to 8,000 units. product b sells for $35, has variable costs of $20, requires 5 machine hours to produce, and the market is limited to 6,000 units. 40,000 machine hours are available. which statement is true?

Respuesta :

The correct statement is :a.The company should produce 8000 units of Product A and 4800 units of Product B.

How to find the Production mix?

Product A

Contribution per machine -hour = Contribution per unit / Per unit labor hour required A

Contribution per machine -hour=$25-15/2 hours

Contribution per machine -hour= 5 per machine hour

Production mix  = 40,000 machine hours/ 5 per machine hour

Production mix   = 8,000 units

Product B

Production mix = [40,000 -(  (8000 units x 2 machine hours)]

Production mix = [40,000 hours -16,000 hours] / 5 per machine hour

Production mix = 24,000 /5 per machine hour

Production mix  = 4,800 units

Therefore the correct option is A.

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The complete question is:

A company produces two products. Product A sells for $25, has variable costs of $15, requires 2 machine hours to produce, and the market is limited to 8,000 units. Product B sells for $35, has variable costs of $20, requires 5 machine hours to produce, and the market is limited to 6,000 units. 40,000 machine hours are available. Which statement is true?

a. The company should produce 8,000 units of Product A and 4,800 units of Products

b. The company should produce 6,000 units of Product B and 5.000 units of Product A

c. The best sales mix cannot be determined from the information given.

d. The company should produce 4,000 units of Product A and 3,000 units of Product B.