Product X requires 10 machine hours per unit to be produced,Product Y requires only 6 machine hours per unit,and the company's productive capacity is limited to 240,000 machine hours.Product A sells for $32 per unit and has variable costs of $12 per unit.Product B sells for $24 per unit and has variable costs of $7 per unit.Assuming the company can sell as many units of either product as it produces,the company should:
A) Produce only Product X.
B) Produce only Product Y.
C) Produce equal amounts of X and Y.
D) Produce X and Y in the ratio of 62.5% X to 37.5% Y.
E) Produce X and Y in the ratio of 40% X and 60% Y.

Question

Quizplus · Accepted Answer

$$\begin{array} {l} 
&\text{Product X}&\text{Product Y}\
\text{Sales price}&\$ 32&\$ 24\
\text{Variable costs}&12&7\
\text{Contribution}&\$ 20&17\
\text{margin per unit}\
\text{Hours per unit}& 10~\text{hours}& 6~\text{hours}\
\text{CM per hour}&\$ 2.00&\$ 2.83
\end{array}$$

Product X Requires 10 Machine Hours Per Unit to Be