CA Inter P4 · Chapter 13 · Question 6 of 10
Products A and B have contributions of ₹60 and ₹84 per unit respectively. Product A requires 3 machine hours per unit and B requires 6 machine hours per unit. Machine hours are the key factor and demand for both is unlimited. The company should:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Prefer product A, as its contribution per machine hour is ₹20 against ₹14 for B
Explanation
When a resource is limited, products are ranked by contribution per unit of the key factor. A: ₹60 / 3 = ₹20 per machine hour; B: ₹84 / 6 = ₹14 per machine hour. Each hour used for A earns ₹6 more contribution, so A should be preferred.
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