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The XYZ Corporation manufacturers both Product A and Product B.
Operating Information from the previous year is as follows:

Product A:
Units produced and sold 5000
Machine hours used 5000
Sales price per unit $6
Variable cost per unit $4

Product B:
Units produced and sold 3000
Mavchine hours used 2000
Sales price per unit $9
Variable cost per unit $8

Contribution margin per machine hour (A) 2
Contribution margin per machine hour (B) 1.5

Machine hours constraint:
Machine hours per unit (A)
Machine hours per unit (B)
Max units produced & sold (A)
Max units produced & sold (B)
Max CM - 100% (A)
Max CM - 100% (B)

Units produced & sold (A) IF(f24>=f25,f22,0)
Units produced & sold (B) IF(f25>=f24,f23,0)

Assuming that there is an unlimited demand for both products and XYZ has 12,000 machine hours available, how many units of each product should be produced and sold?

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Solution Summary

The solution assists with answering the accounting problem assuming that there is an unlimited demand for both products and XYZ has 12,000 machine hours available. It determines how many units of each product should be produced and sold.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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