Axis Company produces 3 products on the same equipment. Demand has grown and adequate capacity doesn't exist to meet the market demand for all three. Axis has more equipment being installed, but capacity will not increase for four months. In the meantime, Axis's management wants help in deciding how to allocate its scarce capacity. The following information is available:

Product	A	B	C
Sales Revenue	$20.00	$15.00	$12.50
Variable Costs	9.50	7.50	5.00
Allocated Fixed Costs (not separable)	9.50	7.50	6.50
Unit Profit	$1.00	$0.00	$1.00
Minutes on Equipment	5	2	3

To maximize profits how should scarce capacity on equipment be used?

Product only A and C since product B doesn't yield any profit.

Produce up to market demand for product A, then product B, and use any leftover capacity on product C.

Use all capacity on product A since it maximizes sales revenue and contribution margin.

Produce up to market demand for product B, followed by product C, and use any leftover capacity on product A.