Product X requires 10 machine hours per unit to be produced, Product Y requires

Question

Product X requires 10 machine hours per unit to be produced, Product Y requires only 6 machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. Product A sells for $32 per unit and has variable costs of $12 per unit. Product B sells for $24 per unit and has variable costs of $7 per unit. Assuming the company can sell as many units of either product as it produces, the company should:
A. Produce only Product Y.
B. Produce X and Y in the ratio of 62.5% X to 37.5% Y.
C. Produce X and Y in the ratio of 40% X and 60% Y.
D. Produce equal amounts of X and Y.
E. Produce only Product X.

Explanation / Answer

C. Produce X and Y in the ratio of 40% X and 60% Y.

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