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 4,450 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 4,450 production hours available. Contribution margin is $8 for poct 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 O Allocate 24% its production capacity to Product Y Allocate all of its production capacity to Product Y Allocate all of its production capacity to Product X

Explanation / Answer

1) Contribution margin by producing X per hour = 16

Contribution margin by producing Y per hour = 21

2) Almost all of its production capacity to Product Y

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