Smythe Manufacturing Has 27,000 Labor Hours Available for Producing X

question 18

Multiple Choice

Smythe Manufacturing has 27,000 labor hours available for producing X and Y. Consider the following information: $\begin{array}{lcc}&\text { Product X } &\text { Product Y }\\\text { Required labor time per unit (hours) } & 2 & 3 \\\text { Maximum demand (units) } & 6,000 & 8,000 \\\text { Contribution margin per unit } & \$ 5.00 & \$ 6.00 \\\text { Contribution margin per labor hour } & \$ 2.50 & \$ 2.00\end{array}$ If Smythe follows proper managerial accounting practices, which of the following production schedules should the company set? $\begin{array}{ll}\text { Product X } & \text { Product Y }\\\text { A. } 0 \text { units } & 8,000 \text { units } \\\text { B. } 1,500 \text { units } & 8,000 \text { units } \\\text { C. } 6,000 \text { units } & 0 \text { units } \\\text { D. } 6,000 \text { units } & 5,000 \text { units } \\\text { E. } 6,000 \text { units } & 8,000 \text { units }\end{array}$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D
• E) Choice E

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Definitions:

Assets Distribution

The process of allocating a company's or estate's assets to creditors, shareholders, or heirs according to legal agreements or laws.

Creditors

Individuals or institutions to whom money is owed by debtors or borrowers.

Loan

A sum of money that is borrowed, often from a bank, which is expected to be paid back with interest.

Personal Liability

The legal responsibility of an individual to bear financial costs associated with damages or legal proceedings.