Xenos Inc. has 6,600 machine hours available each month. The following information on the company's three products is available:
$$\begin{array} { l r r r }
& \text { Product X } & \text { Product Y } & \text { Product Z } \
\text { Contribution margin per unit } & \$ 20.00 & \$ 2 1 . 0 0 & \$ 1 7 . 50\
\text { Machine hours per urit } & 2 & 3 & 2
\end{array}$$
If market demand exceeds the available capacity, in what sequence should orders be filled to maximize the company's profits?
A) Product X first, product Z second, and product Y third.
B) Product Y first, product Z second, and product X third.
C) Product Y first, product X second, and product Z third.
D) Product Z first, product X second, and product Y third.

Question

Xenos Inc. has 6,600 machine hours available each month. The following information on the company's three products is available:
$$\begin{array} { l r r r } 
& \text { Product X } & \text { Product Y } & \text { Product Z } \
\text { Contribution margin per unit } & \$ 20.00 & \$ 2 1 . 0 0  & \$ 1 7 . 50\
\text { Machine hours per urit } & 2 & 3 & 2
\end{array}$$
If market demand exceeds the available capacity, in what sequence should orders be filled to maximize the company's profits?
A) Product X first, product Z second, and product Y third.
B) Product Y first, product Z second, and product X third.
C) Product Y first, product X second, and product Z third.
D) Product Z first, product X second, and product Y third.

Quizplus · Accepted Answer

To maximize profits, prioritize products with the highest contribution margin per machine hour. Product X: $20/2 = $10, Product Y: $21/3 = $7, Product Z: $17.50/2 = $8.75. Sequence: X, Z, Y.

Xenos Inc Has 6,600 Machine Hours Available Each Month If Market Demand Exceeds the Available Capacity, in What Sequence