# Acompany produces two products. product a sells for \$25, has variable costs of \$15, and requires 2 machine hours to produce. product

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Acompany 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 2 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? the company should produce 8,000 units of product a and 4,800 units of product b.

Correct Question:   A company produces two products. Product A sells for \$25, has variable costs of \$15, requires 2 machine hours to produce and the market is limites to 8,000 units. Product B sells for \$35, has variable costs of \$20, requires 5 machine hours to produce, and the market is limited to 6,000 units. 40,000 machine hours are available. What should the company produce of Product A and B? 8000 units of product A and 4,800 units of product B should be produced. Explanation: Product A sells for \$25 but cost \$15 to produce. It means there is a contribution margin of \$10 per unit (i.e \$25-\$15) since it takes 2hours to produce product A we have 10/2= 5 products per machine hour. \$10 × 8000 units = \$80,000 (in profits) on the other hand, if product B is to be sold at \$35 per unit but has a production cost of \$20, it means a contribution margin of \$15(i.e \$35-\$20) is embedded in each \$35 sale. If the company produces 4,800 units of this product B, it means that the company has \$15 × 4,800 units = \$72, 000 Since the aim of the company’s production is to make profit, it is very clear that product A should be produced compared to product B because it has a higher contribution margin

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H Explanation:

The company should produce 8,000 units of Product A and 4,800 units of Product B. Explanation: A: CM=\$25-15=10/2 hours=5 per machine hour. 8000 units x 2 machine hours=16,000 hours. 40,000 total hours available-16,000 hours for Product A leaves 24,000 hours. 24,000/5 hours for Product B = 4,800.

# Acompany produces two products. product a sells for \$25, has variable costs of \$15, and requires 2 machine hours to produce. product

A 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 \$50, has fixed costs of \$10 per unit, and requires 1 machine hour to produce. Requirements: 1) Calculate the total cost of producing product A and product B. 2) Calculate the net income from producing product A and product B.

## Acompany produces two products. product a sells for \$25, has variable costs of \$15, and requires 2 machine hours to produce

Acompany produces two products. product a sells for \$25, has variable costs of \$15, and requires 2 machine hours to produce. product b sells for \$50, has fixed costs of \$5, and requires no machine hours to produce.

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Assuming that both products are selling at the same rate (50 units per week), which product would have a higher profit margin?

Product A would have a higher profit margin because it has lower variable costs (\$15) and requires less machine hours (2) to produce than product b (which requires 5 machine hours). Additionally, product a’s fixed costs of \$5 represent a smaller portion of its total costs as compared to product b’s fixed costs of \$10.

## Product A has higher fixed costs and thus will have a higher total cost of production

Product A has higher fixed costs, which means that its total cost of production is higher than product B. This is because product A requires more machine hours to produce than product B does. In other words, the more machine hours it takes to produce a good or service, the greater the cost of that good or service.

## Product B has lower fixed costs and thus will have a lower total cost of production

Product B has lower fixed costs and thus will have a lower total cost of production. This is because per unit, it requires less machine hours to produce than Product A. This means that the company will be able to sell Product B for less than Product A.

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## The marginal product of labor for product A is greater than for product B, meaning that the worker would be more productive producing product A than product B

Product A has a higher marginal product of labor than Product B. This means that the individual worker would be more productive if they were to produce Product A instead of Product B.

Product A requires less machine hours to produce than Product B. This is because it has a lower variable cost. In other words, the cost of producing one unit of product A is less than the cost of producing one unit of product B.

Because Product A has a higher marginal product of labor and less machine hours to produce, it is likely to be more profitable for an individual to produce it than Product B.

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