Question

45. Ellot Company can sell ll of ts products A and Z thatit can produce, but it has limited production ,000 production capacity. It can produce 8 units of A per hour or 10 units of Z per hour, and it has 20 hours available. Contribution margin per unit is $12 for A sales mix for Elliot Company? A. 84,000 units of A and 60,000 units of Z B. 48,000 units of A and 80,000 units of z C. 60,000 units of A and 100,000 units of Z D. 120,000 units of A and 0 units of Z. E. 0 units of A and 200,000 units of Z and $10 for Z. What is the most profitable

Answer 1

Contribution margin per hour of A = 12/.125 = 96 per hour

Contribution margin per hour of Z = 10/.10 = 100 per hour

so company should prepare only product Z and in 20000 hour 200000 unit of Z should be prepare

so answer is e) 0 units of A and 200000 units of Z