Manico Corporation Produces Three Products -- X, Y, & Z

question 6

Multiple Choice

Manico Corporation produces three products -- X, Y, & Z -- with the following characteristics: The company has only 2,000 machine-hours available each month. If demand exceeds the company's capacity, in what sequence should orders be filled if the company wants to maximize its total contribution margin?

• A)orders for Z first, X second, and Y third
• B)orders for X first, Z second, and Y third
• C)orders for Y first, X second, and Z third
• D)orders for Z first and no orders for X or Y

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Definitions:

Annual Interest Tax Shield

The reduction in income taxes a company achieves through deductible interest expenses.