Question

Dunhill Company produces 4 products. Information on these four products are as follows

               Selling Price     Variable Cost     Labour hours    Machine hours

Product A    $30.00           $25.00                5                   5
Product B   $25.00            $19.00               6                    3
Product C   $20.00            $10.00              5                     2
Product D   $15.00 $3.00              6                      3

Dunhill company has limited machine hours. The four products should be produced in
the following order –
a. C,D,B,A
b. D,C,B,A
c. A,B,C,D
d. C,B,D,A

Answer 1

	Product A	Product B	Product C	Product D
Selling Price	30.00	25.00	20.00	15.00
Less: Variable Cost	25.00	19.00	10.00	3.00
Contribution margin per unit	5.00	6.00	10.00	12.00
Divide by Machine hours	5	3	2	3
Contribution margin per machine hour	1.00	2.00	5.00	4.00
Rank in order of most profitable	4	3	1	2
The four products should be produced in the following order C D B A
Option A is correct