he Dot Company manufactures two products: X and Y. The contribution margin per u

Question

he Dot Company manufactures two products: X and Y. The contribution margin per unit is determined as follows: X £30; Y £21. Total demand for Product X is 16,000 units and for Product Y is 8,000 units. Machine hours is a scarce resource. During the year, 42,000 machine hours are available. Product X requires 3 machine hours per unit, while Product Y requires 3 machine hours per unit. Dot Company should produce Select one: a. X 16,000 units; Y 0 units b. X 6,000 units; Y 0 units c. X 0 units; Y 8,000 units d. X 6,000 units; Y 8,000 units e. cannot be determined

Explanation / Answer

Ans e. cannot be determined

STATEMENT OF RANKING X Y DEMAND 16000 8000 CONTRIBUTION MARGIN 30 21 HOURS PER UNIT 3 3 CONTRIBUTION PER HOUR 10 7 RANKING 1 2 STATEMENT OF OPTIMUM PRODUCT MIX X = 14000 units 14000 units * 3 = 42000 hours Y = 0 units 0 units

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