Question
Swifty Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of
Swifty Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $70 and takes two machine hours to make and Fancy has a unit contribution margin of $69 and takes three machine hours to make. There are 2400 machine hours available to manufacture a product. What should Swifty do?
Make Fancy which creates $36 more profit per unit than Plain does.
Make Plain because more units can be made and sold than Fancy.
Make Plain which creates $12 more profit per machine hour than Fancy does.
The same total profits exist regardless of which product is made.
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