Contribution margin per machine-hour

Question

Use the following information to answer questions 1 through 3.

Domino Co. manufactures three sizes of dog carriers: small, medium, and large. Potential sales include 100 units of small, 120 units of medium, and 100 units of large per month. The barrier in reaching the sales level revolves around the maximum machine hours available, 600 per month. Product information is provided below.

Unit                    Small        Medium        Large

Selling price          $30            $50           $100
Costs
    Variable             18              30              46
    Fixed                  8               10              24

Machine Hours per Unit     2        4              10

Question 1. What is the contribution margin per machine-hour for small units?

a. $10.00.
b. $ 6.00.
c. $ 5.40.
d. $ 3.60
e. none of the above

Question 2. If management incorporates a short-run profit maximizing strategy, which of the three product models should be produced first?

a. Small.
b. Medium.
c. Large.
d. Either medium or large.
      
Question 3. Using the short-run strategy, how many of each product should be produced per month?

   Small     Medium    Large
a.   0         120          12
b.  100         0           40
c.  100      100           0
d.  100       20           40
e.  None of the above