Question

LeBron Corporation manufactures two products, XX and YY. These products use the same set of machines. Some unanticipated repairs have led to a sharp reduction in available machine time for October 2016. A maximum of 5,100 machine hours is available and LeBron can potentially sell as many as 1,500 units of XX and 1,500 units of YY this month. Other relevant details are provided below:

                                                                                               XX                    YY

                        Selling price per unit                                $15.00               $20.00

                        Variable costs per unit                                  9.00                 15.00

                        Amount of machine time needed per unit          3                       2

To maximize October’s contribution from sales, LeBron should

		produce and sell 800 units of XX and 1,350 units of YY
		produce and sell 1,500 units of XX and 300 units of YY
		produce and sell 700 units of XX and 1,500 units of YY
		produce and sell 1,500 units of XX and 1,500 units of YY

Answer 1

20 2 Sales Decision With Limiting Factor : Limiting Factor if Machine Hours XX Selling Price 15 varaible cost 9 15 Contribution Margin 6 Machine Hours Required 3 Contribution Margin Per hour 2 2.5 Rank According to the Best Contribution Demand 1500 1500 Machine Hours Required 4500 3000 Allocation of Labor hours ( Based on rank) 2100 3000 units After Allocation 700 1500 Answer:Pruduce and sell 700 Units of XX and 1,500 units of YY XX YY Sales Mix (Most Profitable ) 700 L 1500 2