Question

Santorino Company produces two models of a component, Model K-3 and Model P-4. The unit contribution margin for Model K-3 is $6; the unit contribution margin for Model P-4 is $14. Each model must spend time on a special machine. The firm owns two machines that together provide 4,000 hours of machine time per year. Model K-3 requires 15 minutes of machine time; Model P-4 requires 30 minutes of machine time. ​ What is the amount of machine time for model P-4 in terms of percent of a machine hour? a. 50% b. 25% c. 30% d. 20% e. 10%

Answer 1

The correct answer is Option A - 50%

Explanation:

Model P-4 requires 30 minutes of machine time.

A machine hour consists of 60 minutes. Hence, to calculate the machine time of Model P-4 in terms of percent of machine hour, the following calculation is done:

= (Model P-4 Machine time/Machine Hour)*100

= (30/60)*100

=50%

So the percent of Model P-4 machine time in terms of a machine hour is 50%