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ABC Company produces Product X, Product Y and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is
ABC Company produces Product X, Product Y and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 1,420 hours per month ABC Company wants to determine the product mix that should be achieved to meet the high demand for each product and provide the maximum profit. Following is information about each product Product X- $152 105 Product Y $118 58 S 39 28 Selling price Variable costs Machine time per unit Monthly demand (units) 2 hours 2 hours 1 hour 430 280 750 Required Determine how the 1,420 hours of machine time should be allocated to the three products to provide the most profitable product mix. (Do not round intermediate calculations.) Allocated Machine Time Product X Product Y Product Z hours hours hours References eBook &Resources Worksheet 16-02 Explain how costs are determined to be relevant for short-run decisions Difficulty: 2 Medium Learning Objective 16-03 Analyze relevant costs for the following decisions sell or process further special pricing, target costing. make or buy, segment, and product
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