Homework SourseXYZ Company produces three products A B and C XYZs plant cap
XYZ Company produces three products, A, B, and C. XYZ\'s plant capacity is limited to 48,000 machine hours per year. The following information is available for planning purposes: Product A Product B Product C demand for next year ............. 24,000 units 25,000 units 12,000 units selling price per unit ........... $80 $120 $160 direct material cost per unit .... $24 $ 21 $ 38 direct labor cost per unit ....... $18 $ 50 $ 38 variable overhead cost per unit .. $22 $ 25 $ 54 It takes 0.80 machine hours to produce one unit of Product A; 1.25 machine hours to produce one unit of Product B; and 1.60 machine hours to produce one unit of Product C. Calculate the total number of units of Product B that XYZ Company should produce in order to maximize its net income.
Solution
Total hours available = 48000 machine hour
Product A machine hour used = 24000*.80 = 19200 hour
Rest hour use for product B = (48000-19200)/1.25 = 23040 unit
so answer is 23040 unit of Product B that XYZ Company should
| Product A | Product B | Product C | |
| Contribution margin per unit | 16 | 24 | 30 |
| Machine hour per unit | 0.80 | 1.25 | 1.60 |
| Contribution margin per hour | 20 | 19.2 | 18.75 |
| Rank | 1 | 2 | 3 |
