Excel Memory Company can sell all units of computer memory X and Y that it can p

Question

Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,150 production hours available. Contribution margin is $8 for product X and $7 for product Y.

Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,150 production hours available. Contribution margin is $8 for product X and $7 for product Y 1. Calculate contribution margin per production hour. Contribution Margin per Production Hour Product X Product Y Contribution margin per production hour 2. What is the most profitable sales mix for this Company? Allocate 40% its production capacity to Product X Allocate all of its production capacity to Product X O Allocate 24% its production capacity to Product Y Allocate all of its production capacity to Product Y

Explanation / Answer

since all units produced can be sold ,so it is better to manufacture all units of product Y .

correct option is " D" -allocate all of its producin capacity to product Y

Product X Y Contribution per unit 8 7 Units manufactured in an hour 2 3 contribution margin per production hour 16    [8*2] 21    [7*3]

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