A Company Has 100,000 Hours of Capacity and Manufactures Two

question 131

Multiple Choice

A company has 100,000 hours of capacity and manufactures two products,Product X and Product Z.Neither product has enough demand to utilize the entire capacity,but the combined demand of both products exceeds the capacity of the plant.It takes one hour to make one unit of Product X and two hours to make one unit of Product Z.The following information is available:
$\begin{array}{ll}&\text { Product X }&\text { Product Z }\\\text { Units produced from capacity available }&100,000 & 50,000 \\\text { Contribution margin per unit }&\$ 20 & \$ 30\end{array}$
What product or products should be made?

• A) only make Product X
• B) only make Product Z
• C) make Product X to meet customer demand and then make Product Z
• D) make Product Z to meet customer demand and then make Product X

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Definitions:

Vesting

The process by which an employee acquires non-forfeitable rights over employer-provided stock incentives or contributions made to the employee's pension plan, often based on length of service.

AASB 119/IAS 19

Accounting standards that dictate the accounting for employee benefits, including pensions and other post-employment benefits, aligning with international financial reporting standards.

Share-Based Payments

Transactions in which an entity acquires goods or services by issuing shares of its stock, options, or other equity instruments.

Long Service Leave

A benefit offered to employees who have been with a company for a long period, often allowing for extended paid time off.