Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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PMC Company manufactures and sells three lines of product with contribution margins per unit as follows: Product A = P12; Product B = P2; Product C = P5.
Each unit of product requires production time as follows: Product A = 3 hours; Product B = 10 minutes; Product C = 2 hours.
The company has plant capacity of 20,000 machine hours a month. The market can absorb 2,000 units of Product A, 24,000 units of Product B and 15,000 units of Product C.
- What is the most profitable product line on the basis of contribution margin per machine hour?
A. ProductA
B. ProductB
C. ProductC
2. Compute the maximum contribution margin for the month that will meet the conditions stated
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