Question

pring, Inc. manufactures two products. It currently has 1,300 hours of direct labor and 3,250 hours of machine time available per month. The table below lists the contribution margin, labor and machine time requirements, and demand for each product.

	Product A			Product B
Unit contribution margin	$	34.00		$	30.00
Demand		2,600	units		1,300	units
Labor time		1/4	hour		1/2	hour
Machine time		1	hour		1/2	hour

How much of each product should Spring manufacture per month?

Answer 1

Answer
Labour hour required = 2600*.25+1300*.50 = 1300 hour but currently have 1300 hour so labour hour is not insufficient
But machine hour required = 2600*1+1300*.50 = 3250 but currently have 3250 machine hour so machine hour is insufficient
	Product A	Product B
Contribution margin per unit	34	30
Machine hour per unit	1	0.5
Contribution margin per hour	34	60
Rank	2	1
So answer is c) 0 units of A and 1,300 units of B