Express Toys makes 2 products, both of which currently have very strong demand.
ID: 2492733 • Letter: E
Question
Express Toys makes 2 products, both of which currently have very strong demand. Product P sells for $7.00 per unit, has a variable cost of $3.00 per unit, and requires 2 minutes of processing time on Machine A. Product Q sells for $9.00 per unit, has variable cost of $2.00 per unit, and requires 10 minutes processing time on Machine A. If there are only 3,000 hours available on Machine A during the month, which product should be produced?
A) Product P
B) Neither product P nor Q
C) Equal quantities of each product
D) Product Q
Explanation / Answer
From the above Ranking, Product P should be produced during the Month since it's Contribution per minute of processing time on Machine A is higher than Product Q.
A) Product P
Product P Product Q Selling price($) 7 9 Less: Variable cost($) -3 -2 Contribution per unit($) 4 7 Processing time on Machine A 2 minutes 10 minutes Contribution per minute of processing time on Machine A ($) 2 0.7 Ranking I IIRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.