Question

Dunford Company produces three products with the following costs and selling prices:

		Product
		X	Y	Z
	Selling price per unit..............................................	$40	$30	$35
	Variable costs per unit...........................................	24	16	20
	Contribution margin per unit.................................	$16	$14	$15
	Direct labor hours per unit.....................................	4	2	3
	Machine hours per unit..........................................	5	7	4

             If Dunford has a limit of 30,000 machine hours but no limit on units sold or direct labor hours, then the three products should be produced in which order?

Question 31 options:

	Y, Z, X
	X, Y, Z
	X, Z, Y
	Z, X, Y

Answer 1

The Constrained Resource is Machine Hours. The Product with higher Contribution Margin Per Machine Hour should be produced first. z 15.00 14.00 $ Contribution Margin Per Unit Machine Hours Per Unit Contribution Margin Per Machine Hour х 16.00 $ 5 3.20 $ 4 EA 2.00 $ 3.75 Ranking III So, the Order is 2, X, Y So, Option 4 is Correct Answer.