Hamrick Industries makes and sells two products. The demand for both products is unlimited. Product A...
Hamrick Industries makes and sells two products. The demand for
both products is unlimited. Product A has a contribution margin of
$7.70 per unit. Product B has a contribution margin of $2.64 per
unit. The same machines are used to produce both products. Product
A requires 0.33 machine hours and product B requires 0.20 machine
hours. Which product should the company make and sell?
A. Product A because the selling price is $11.00 per unit.
B. Product A because the contribution margin per unit is $7.70.
C. Product A because the contribution margin per MH is $23.33.
D. Product B because the contribution margin per MH is $13.20.
E. Product B because the contribution margin per unit is $2.64.
Homework Answers
| Product A | Product B | |
| Contribution margin per unit | 7.70 | 2.64 |
| Divide by machine hours per unit | 0.33 | 0.20 |
| Contribution margin per MH | 23.33 | 13.20 |
| Product A because the contribution margin per MH is $23.33 | ||
| Option C is correct | ||
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