A Company Manufactures Three Products

question 38

Essay

A company manufactures three products.Each unit of product X requires 10 machine hours,each unit of product Y requires 4 machine hours,and each unit of product Z requires 6 machine hours.The company's productive capacity is limited to 180,000 machine hours.Each unit of product X sells for $15 and has variable costs of $7.Each unit of product Y sells for $8 and has variable costs of $3.Each unit of Z sells for $12 and has variable costs of $4.
Required:
a.Calculate the contribution margin per hour of each of the products.
b.Determine the preferred sales mix if there are no market constraints on any of the products.
c.Determine the preferred sales mix if the demand is limited to 20,000 units of each.

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Definitions:

Kidneys

Bean-shaped organs in vertebrates responsible for filtering blood, removing waste products, and excreting urine.

Glomerular Filtration

The process by which the kidneys filter blood, removing excess wastes and fluids to form urine.

Urine Formation

The process by which kidneys filter blood, remove waste products and excess substances, and excrete them as urine.

First Step

The initial action or move in a process or sequence of actions.