Santorino Company produces two models of a component, Model K-3 and Model P-4. The unit contribution margin
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Question:
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 K-3 should be produced?
5,500 | ||
312 | ||
1,250 | ||
2,750 | ||
5,000 |
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