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Harley Davidson sells motorcycle A and B. Motorcycle A sells for $10,000, has variable cost (labour and material) of $2,000, and requires ten hours of employ of machinery to manufacture. Motorcycle B sells for $12,000, has variable costs (labour and material) of $8,000, and requires two hours of employ of machinery to manufacture. Harley Davidson has excess capacity of the 5,000 hours of employ of machinery. Which motorcycle should it manufacture?

a. Motorcycle A because it has higher contribution margin of $8,000.
b. Motorcycle B because it has higher contribution margin per hour of $2,000.
c. Motorcycle A because it has higher contribution margin per hour of $4,000.
d. Motorcycle B because it has higher contribution margin of $4,000

Project Management, Management Studies

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