A company has 100,000 hours of capacity and manufactures two products,Product X and Product Z.Neither product has enough demand to utilize the entire capacity,but the combined demand of both products exceeds the capacity of the plant.It takes one hour to make one unit of Product X and two hours to make one unit of Product Z.The following information is available:
$\begin{array}{ll}&\text { Product X }&\text { Product Z }\
\text { Units produced from capacity available }&100,000 & 50,000 \
\text { Contribution margin per unit }&\$ 20 & \$ 30
\end{array}$
What product or products should be made?
A) only make Product X
B) only make Product Z
C) make Product X to meet customer demand and then make Product Z
D) make Product Z to meet customer demand and then make Product X

Question

Quizplus · Accepted Answer

To maximize profit, the company should first meet the demand for Product X and then use any remaining capacity for Product Z. This approach ensures that the company utilizes its capacity efficiently while meeting customer demand for both products.

A Company Has 100,000 Hours of Capacity and Manufactures Two