Hi,
The answer will be D.. 120 units of product Y only.
Here we need to find the contribution margin as well as the contribution margin per limiting factor.
Here the limiting factor is qty (lbs) of materials.
Now for product X and Y, the CM per LF.
X = 200 - 176 =24
Y = 250- 200 =50
Limiting factor
for X = 1200/8 =150 units
For Y = 1200/10 =120 units
So CM per LF for
X = 24/150 = 0.16
Y = 50/120 =0.42
So it's evident that CM per LF is more for product Y. So we need to produce entire units of Y.
Now we need to check how many units are remaining after production of X
Here for Y no of units is 120 and RM required per unit is 10 so total units produced is 1200 lbs.
Required units is 1200 lbs only. So no need to produce Product X.
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VIMAL RAJ CHAKKINGAL
Student
PALAKKAD
India
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Original Message:
Sent: 06-13-2022 04:21 PM
From: TIMUCIN ONER
Subject: THEORIES OF CONSTRAINT
A manufacturer has a limited supply of 1,200 lbs of raw materials that can be used to produce either Product X or Y, details of which are given below. | Product X | Product Y | Selling price per unit | $200 | $250 | Variable costs per unit | $176 | $200 | Raw materials used per unit | 8 lbs | 10 lbs |
Which one of the following should the manufacturer produce in order to maximize contribution margin? |
| | | | | | | | |
|
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TIMUCIN ONER
Director/Manager
ANTALYA
Turkey
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