A. After manufacturing 8,000 units of B12 the company would still have enough machine hours available to produce some B18.

B. This is not the most cost effective method available to the company. The company will be paying $3.00 more per unit to manufacture B12 units ($11.25 - $8.25 = $3.00).

C. This is not the most cost effective method available to the company. Not all available machine hours would be used in the manufacturing process.

D. Whenever a resource is constrained, as the machine hours are in this problem, we need to work with cost or contribution margin per unit of the constrained resource, whichever is appropriate. Here, the "cost" is the amount that the outside supplier will charge over and above the total variable cost to produce the component in-house. And the "per unit of the constrained resource" is per machine hours. For this problem, we need to find the increased cost per machine hour for each of the products if the units are purchased from the outside supplier.  The product with the lower increased cost per machine hour is the one that should be purchased outside, and the other product should be manufactured. The first thing needed is to determine the loss per unit of the constrained resource if each product is purchased outside instead of being manufactured in-house. To do this, we total all of the variable costs per unit ($2.25 + $4.00 + $2.00 = $8.25 for B12, and $3.75 + $4.50 + $2.25 = $10.50 for B18). We then subtract the quoted price from the supplier for each of the components from their variable costs to produce in-house. This gives us $8.25 - $11.25, or $(3.00) for B12, and $10.50 - $13.50, or $(3.00) for B18. This is the increased cost or loss per component to purchase the parts from the outside supplier. Then, we divide each of those total costs per component by the number of machine hours required to produce each product to calculate the cost per machine hour, which will be the cost per unit of the constrained resource.By purchasing B12 outside, the company's cost will increase by $3.00 per unit, or $1.20 per machine hour ($3.00 ÷ 2.5 machine hours per unit). By purchasing B18 outside, the cost will increase by $3.00 per unit, or $1.00 per machine hour ($3.00 ÷ 3.0 machine hours per unit). Since the loss per machine hour (the constrained resource) is greater to purchase B12, the company would be better off to manufacture all 8,000 units needed of B12. With the constraint of 41,000 machine hours, the company would have 21,000 hours that would be available to produce B18 (8,000 units of B12 × 2.5 machine hours per unit = 20,000 hours. 41,000 - 20,000 = 21,000 hours remaining). Based on the 21,000 hours of available machine hours left, the company would be able to produce 7,000 units of B18 (21,000 ÷ 3 machine hours per unit = 7,000 units). The remaining units, 11,000 needed minus 7,000 produced, or 4,000 units, would need to be purchased outside.