Question 4

Mars Company manufactures and sells three products. Relevant per unit data concerning each product are given below.

		Product
		A		B		C
Selling price		$10		$13		$18
Variable costs and expenses		$5		$11		$15
Machine hours to produce		2		1		2

Compute the contribution margin per unit of limited resource (machine hours) for each product. (Round contribution margin per unit to 2 decimal places, e.g. 1.50.)

		Product A		Product B		Product C
Contribution margin per unit of limited resource		$		$		$

Assuming 3,000 additional machine hours are available, which product should be manufactured? Product AProduct BProduct C

What is the total contribution margin if the additional hours are (1) divided equally among the products, and (2) if they are allocated entirely to the product identified above.

			Total contribution margin
(1)	Divided equally amoung the products		$
(2)	Allocated entirely to the product identified above		$