Toledo Manufacturing Ltd., produces three products: X, Y, and Z. A limitation of 240 labor hours per week prevents the company from meeting the sales demand for these products. Product information is as follows: ............

X.................. .............Y............................... Z

Unit Selling Price:...........................................................160 ............................100............................ 210 Unit Variable Costs:....................................................... (100)........................... (50)........................... (180) Unit Contribution Margin:................................................. 60.............................. 50.............................. 30 Labor Hours per Unit:....................................................... 6................................ 4............................... 6

a) Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest:

1. Unit Selling Price

2. Unit Contribution Margin

3. Contribution per Labor Hour (Hint: each simulation is independent of the others)

b) What generalizations can be made regarding the allocation of limited resources to achieve short-run profit maximization?

c) Determine the opportunity costs the company will incur if management requires the weekly production of 12 units of Z.

d) Give reasons why a company may not allocate resources in the most economical way in some situations.