Santorino Company produces two models of a component, Model K-3 and Model P-4. The unit contribution margin for Model K-3 is $6; the unit contribution margin for Model P-4 is $14. Each model must spend time on a special machine. The firm owns two machines that together provide 4,000 hours of machine time per year. Model K-3 requires 15 minutes of machine time; Model P-4 requires 30 minutes of machine time.

Now suppose that Santorino Company can sell only 5,500 units of each model. How many units of Model P-4 should be produced?

a.1,375

b.5,000

c.2,750

d.5,500

e.1,250