Question
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000 machine hours per year. The following information is available
XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 48,000 machine hours per year. The following information is available for planning purposes:
Product A Product B Product C
demand for next year ............. 21,000 units 28,000 units 35,000 units
selling price per unit ........... $80 $120 $160
direct material cost per uni t .... $24 $ 22 $ 36
direct labor cost per unit ....... $18 $ 50 $ 62
variable overhead cost per unit .. $22 $ 25 $ 33
It takes 0.80 machine hours to produce one unit of Product A; 1.20 machine hours to produce one unit of Product B; and 1.60 machine hours to produce one unit of Product C.
Assume that XYZ Company can work its plant overtime for 8,000 additional machine hours. Overtime premiums will add 50% to direct labor costs.
Calculate the total number of units of Product C that XYZ Company should produce in order to maximize its net income.
Step by Step Solution
3.53 Rating (150 Votes )
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started