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ABC Company has two products, X and Y. Both products are produced on the same machine. The maximum operating capacity of the machine 5,500hours.
ABC Company has two products, X and Y. Both products are produced on the same machine. The maximum operating capacity of the machine 5,500hours. X requires 3 hours of machine time, while Y requires 5 hours of machine time. Other data regarding X and Y are as follows: X Y Selling price per unit $128.00 $98.00 Direct materials per unit 6.00 3.50 Direct labour cost per hour 15.00 15.00 Variable MOH per DLH 5.50 6.60 FOH rate per MH 4.00 4.00 Variable selling & Admin 25.00 20.00 Product X requires 2.5 DLHS and Product Y requires 1.5 DLHs. Total fixed manufacturing costs for the year are $22,000. The demand for Product X is 600 units and the demand for product Y is unlimited. Fixed selling and admin costs are $8,000. Required: What is the optimal production quantity of Product X and Product Y? 25
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