Question
Clairnex Company produces two products with selling price and variable cost per unit as follows: Product A Product B Selling price per unit $ 50
Clairnex Company produces two products with selling price and variable cost per unit as follows: Product A Product B Selling price per unit $ 50 $ 70 Variable cost per unit 30 40 Due to labor constraints, demand for the products is greater than supply. Product A requires 2 hours of labor to produce and Product B requires 5 hours of labor to produce. Based on this information Clairnex should focus its efforts on selling
Product A | Product B | |
Selling price per unit | $ 50 | $ 70 |
Variable cost per unit | 30 | 40 |
a. Product B because it has a greater contribution margin.
b. Product A because it has a lower variable cost per unit.
c. Product B because it has a lower contribution margin per labor hour.
d. Product A because it has a greater contribution margin per labor hour.
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