Question

Click to watch the Tell Me More Learning Objective 3 video and then answer the questions below. 1. Which of the following is true of the term product mix? a. It refers to the composition of raw material of the primary product sold by the company. b. It refers to the benefit sacrificed when one alternative is chosen over another. c. It refers to the common processes and costs of production up to a split-off point. d. It refers to the relaieamount of each product manufactured by a company. 2. Diamond Materials Corp. produces two types of paper, regular and glossy, with unit contribution margins of $5 and $7, respectively. Each paper must be processed by a special machine. The firm owns four such machines that together provide 12,000 hours of machine time per year. Regular paper requires 0.05 hours of machine time, whereas glossy paper requires 0.20 hours of machine time. What is the contribution margin per hour of machine time for regular paper? a. $35 b. $100 c. $25 d. $140

Answer 1

1. Option (d) is correct

2. Option (b) is correct

Step-by-step explanation:

(a) Product mix refers to the total different types of products offered by a company to its customers.

In other words, the number of product lines that a company offered for selling to its buyers is defined as product mix.

(b) Contribution per hour:

= Contribution margin of regular paper ÷ Machine time required for regular machine

= $5 ÷ 0.05 hours

= $100