Brooks Corporation produces three products -- X, Y, & Z -- with the following ch

Question

Brooks Corporation produces three products -- X, Y, & Z -- with the following characteristics:
....................................................X............... y...................... z
Selling price per unit .............$20 100% ....$16 100% $15 100%

Variable cost per unit ............12 60%..... 12 75% ...............6 40%

Contribution margin per unit ...8 40%.... 4 25% .....9 60%

Machine Hours per unit................... 5............... 3................. 6

The Company has only 2,610 machine-hours available each month. Monthly demand for Product X, Y and Z is 450, 1,250 and 400, respectively. What is the optimal monthly contribution margin of the Company?

Explanation / Answer

Optimal Contibution =4140

X Y Z Selling price per unit 20 16 15 Variable cost per unit 12 12 6 Contribution margin per unit 8 4 9 Machine Hours per unit 5 3 6 Contribution Per Machine hour 1.6 1.33 1.5 Rank 1 3 2 Machine Hour X 450 2250 Z 60 360 Total 450 0 60 2610 Total Optimal Contribution 3600 0 540 4140

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