Question

Wubben, Inc. manufactures two products. It currently has 2,000 hours of direct labor and 1,000 hours of machine time available per month. The table below lists the contribution margin, labor and machine time requirements, and demand for each product.

	Product A	Product B
Unit contribution margin	$15	$12
Demand	1,000 units	2,000 units
Labor time per unit	0.75 hours	0.50 hrs
Machine time per unit	1 hour	0.50 hrs

(T or F ) If Wubben maximized profit, then the firm will manufacture 1,000 units of Product 1 and 2,000 units of Product B per month.

Answer 1

Particulars	Demand	labour Time Per Unit	Total Labour Time	Machine Time Per Unit	Total
Product A	1,000	0.75	750	1.00	1,000
Product B	2,000	0.50	1,000	0.50	1,000
			1,750		2,000
Available Hours	2,000		1,000
In Above workings, we can absorve that machine hours are limited to 1000 where as requirement to meet the demand is 2000 hours. In Order to maximise the profit we have to maximize the contribution per hour.
The Given statement is FALSE because we cant meet the demand with the given machine hours .
Particulars	Product A	Product B
Contribution(A)	15	12
Machine Time(B)	1.00	0.50
Contribution per Machine hour(A/B)	15	24
In Order to maximize the profit , first we have to produce Product B.