Question

Kingston Manufacturing has 29,000 labor hours available for producing X and Y. Consider the following information: Product X Product Y Required labor time per unit (hours) 3 3 Maximum demand (units) 7,000 5,000 Contribution margin per unit $ 5 $ 6 Contribution margin per labor hour $ 4.00 $ 3.50 If Kingston follows proper managerial accounting practices, how many units of Product Y should it produce

Answer 1

Answer:

See below

Explanation:

Contribution margin per labor hour

Contribution margin per labor hour Product X

$4

Product Y

$3.5

Rank

Product X

1

Product Y

3

Optimum mix

Hour

Product X 7,000 × 3 = 21,000 Unit 6,000

Product Y 29,000 - 21,000 = 8,000 Unit 8,000/4 = 2,000

Product Y 6,000 units; 2,000 units