Multiple Choice QuestionA company produces two products. Product A sells for $25, has variable costs of $15, and requires 2 machine hours to produce. Product B sells for $35, has variable costs of $20, and requires 5 machine hours to produce. 40,000 machine hours are available. The company can sell all it can make of either product. Which statement is true?Multiple choice question.Product A should be produced because it will provide greater contribution margin per machine hour.Production should be split between Product A and Product B.Product B should be produced because it will provide greater contribution margin per machine hour.Product A should be produced because it has a lower cost than Product B.

Multiple Choice QuestionWhen products use the same inputs, the company should produce the product with:Multiple choice question.the highest contribution margin per constrained resourcethe highest sales price per constrained unitthe lowest variable cost per constrained resource

Multiple Choice QuestionA manufacturing company currently produces 1,000 units of a product at a cost of $5,000. The units sell for $7,000. Alternatively, the company can process the units further to produce a refined product that will sell for $10,000. The additional processing will cost $4,000. The company should:Multiple choice question.sell as is because processing further will reduce income by $6,000process further because net incremental income will be $1,000process further because net incremental income will be $6,000sell as is because the incremental income of selling as is versus processing further will increase income by $1,000

A plant manager is attempting to determine the production schedule of various products to maximize profit. Assume that a machine hour constraint is binding. If the original amount of machine hours available is 200 minutes, and the range of feasibility is from 130 minutes to 300 minutes, providing two additional machine hours will result in:Group of answer choicesthe same product mix, same total profit.a different product mix, different total profit.the same product mix, different total profit.a different product mix, same total profit as before.

Multiple Choice QuestionA company purchased manufacturing equipment 5 years ago for $50,000. Book value is currently $5,000 and the remaining useful life is 3 years. The equipment incurs variable manufacturing costs of $30,000. The company is considering replacing the equipment. The new equipment will cost $75,000, have a useful life of 3 years, and is more efficient and, therefore, only costs $10,000 in variable manufacturing costs to operate each year. The vendor is willing to accept the old equipment with a selling price of $20,000. The company should:Multiple choice question.keep the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net decrease in income will be $5,000keep the old equipment because replacing it will decrease income by $5,000 if they purchase the new equipment

Multiple Choice QuestionThe derived demand for resources by producers for a product will be low when Blank______.Multiple choice question.supply is low for the productconsumer demand is high for the productsupply is high for the productthe product is selling poorly