Note that it takes twice as long to produce product Y because the variable or fixed overhead applied to product Y is twice as large as the one applied to product X. X Selling price $200 $165 Variable costs 175 125 Unit CM $ 25 $ 40 Hours per unit +1 + 2 CM/hour $ 25 $ 20 h16 All 3.200 hours should be devoted to the manufacture of product X because it would result in the greater CM per unit of the limiting factor (machinc hours of plant capacity). The maximum CM attained by producing product X alone is $25 per hour * 3.200 hours - $80,000; this is greater than producing any combination of products X and Y. 5.16 North Star Guns is a high-technology enterprise making sophisticated products for the armaments market. One of the two profit centers, North Star Engineering, manufactures two types of electronic guidance units: "Standard" and "Deluxe." These units require a high degree of skill in manufacturing. However, because of a shortage of trained engineers, North Star Engineering has only 100 skilled employees, whose total labor capacity (allowing for sickness, leaves, and so on) is expected to be 100,000 hours per year. The data for North Star Engineering follow. Standard Deluxe Materials (parts) $1,000 $4,000 Labor 10 hours @ $20 100 hours @ $20 Variable overhead per labor hour $10 $10 Market price $1,500 $10,000 Fixed overhead $1,000,000 Standard has a potentially unlimited market, but Deluxe has only the Army as a customer. North Star Engineering has a standing order for 500 Deluxe units per year from the Army. 1. What is the total amount of labor hours used now for each product? 2. Which product should be produced in order to maximize total contribution margin of North Star Engineering