Question

A company can sell any mix of Product A and Product B at full capacity. The company has 100,000 hours of capacity. The demand for each product exceeds capacity. It takes one hour to make one unit of Product A and two hours to make one unit of Product B. The following information is available:

Product A Product B
Units produced from capacity available 100,000 50,000
Contribution margin per unit $20 $30

If capacity is the limiting factor, which product should be produced?

Answer 1

Company A produce 100,000.

Step-by-step explanation:

According to the question , the computation is shown below:-

Particulars Product A Product B

Contribution margin per unit $20 $30

Hours per unit 1 2

Contribution margin per unit 20 15

As we can see that the company A produces 100,000 and the same is the answer