Question

XYZ makes three products A, B, & C that use compound W, the current constrained resource: A B C Selling price per unit $ 20 $ 30 $ 40 Variable cost per unit $ 12 $ 20 $ 20 Pounds of compound W per unit 2 4 4 A total of 2,000 pounds of compound W are available. The demand for each product is infinitely large. To generate the largest contribution margin, how many units of each product should XYZ manufacture? Garrison 16e Rechecks 2017-11-11 Multiple Choice 500 units of B only 500 units of C only 250 units of B and 250 units of C 1,000 units of A only

Answer #1

**Answer: Product C 500 units only**

Working:

Particulars |
A |
B |
C |

Selling price per unit |
20 |
30 |
40 |

Less: Variable cost per unit |
12 |
20 |
20 |

Contribution margin per unit |
8 |
10 |
20 |

compound W required per unit |
2 |
4 |
4 |

Contribution margin per constrained resources |
4 |
2.5 |
5 |

ranking |
2 |
3 |
1 |

**To generate the largest contribution
margin:**

Use entire 2,000 components of W to make Product C

Because of higher contribution per pound of W

So number of units of Product C can manufacture = 2,000/4=500units

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Product A
Product B
Contribution margin per unit
$
60
$
56
Pounds of compound W per unit
5
4
A total of 30,000 pounds of compound W are available each period
and the demand for each product is infinitely large. What is the
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period?
Multiple Choice
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$780,000
$420,000
$360,000

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The three products have the following data:
A
B
C
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6.00
16.00
11.00
Variable Cost per unit
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4.00
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2
4
5
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3,667
1,018
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LN
JQ
RQ
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$
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$
302.50
$
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$
97.76
$
223.12
$
303.42
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5.40
7.60
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Selling price per unit
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166.99
$
310.22
$
453.08
Variable cost per unit
$
104.69
$
214.52
$
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6.60
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Rank the products in order of their current profitability from
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Jordison Corporation. Three products use this constrained resource.
Data concerning those products appear below:
LN
JQ
RQ
Selling price per unit
$
162.19
$
308.37
$
425.73
Variable cost per unit
$
133.07
$
241.77
$
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4.50
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A130 B324 C587
Selling price $252 $168 $210
Variable Costs:
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Quantity of Brac/unit 8lb 5lb 3lb
The demand for the products far exceeds the direct materials
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10 minutes
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15 minutes
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