A company is able to produce four products and is planning its production mix for the...

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Accounting

A company is able to produce four products and is planning itsproduction mix for the next period.
Estimated cost, sales, and production data follow:
Product                                                      W                  X                   Y             Z
                                                                   ?                   ?                   ?                ?
SellingPrice/unit                                      29                 36                 61              51
Labour (@ ?5/hr)                                   15                10                 35               25
Material (@ ?1/kg)                                  6                 18                 10              12
Contribution                                             ?8                ?8                ?16           ?14
Resources/Unit                                           ?                  ?                  ?                 ?
Labour(hours)                                          3                   2                7                 5
Materials(Kgs.)                                         6                   18               10              12
Maximum Demand(Units)                   5000               5000               5000          5000
Based on the above data, which is the most appropriate mix underthe two following assumptions?
If labour hours are limited to 50,000 in a period or
If material is limited to 110,000 kgs in a period

Answer & Explanation Solved by verified expert

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Solution Determination of the most appropriate product mix under the assumption of labor hours limited to 50000 in a period Step1 determine the contribution margin per labor hour for each product Step 2 rank the product in order of highest contribution margin per labor hour Step 3 assign labor hours based on the ranking above Step 4 determine the product mix and the profitability W X Y Z labor hours needed per unit 3 2 7 5 contribution margin per unit 8 8 16 14 Contribution margin per labor hour 267 4 229 28 Ranking III I IV II Maximum demand 5000 5000 5000 5000 maximum hours needed 15000 10000 35000 25000 Assigned labor hours 15000 10000 0 25000 Product Mix 5000 5000 0 5000 Labor hours limited W X Y Z Production mix units 5000 5000 0 See Answer

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