Author Question: A company has three products possible products that it can produce in a machine intensive production ... (Read 130 times)

audie · **on:** Mar 6, 2021

A company has three products possible products that it can produce in a machine intensive production process. Capacity is constrained by the number of hours the machines can run during a period and the products are so popular that all units produced will be sold. Here is additional information:

	Product A	Product B	Product C
Contribution per unit	$20	$30	$40
Machine hours per unit	2.5	3.25	4.5

Which of the following would be an accurate conclusion based on these facts?
◦ A balanced mix of 1/3 A, 1/3 B, and 1/3 C should be the goal when maximizing operating income in the short-run.
◦ Since Product C has the greatest contribution margin per unit and therefore emphasizing its production and sales will lead to the highest operating income in the short-run
◦ Since A takes less time to produce, maximization of operating income will occur by emphasizing production and sales of A.
◦ Product B should be emphasized if the goal is to maximize contribution margin.

ilianabrrr · **Reply #1 on:** Mar 6, 2021

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