Question

Kingston Manufacturing has 27,000 labor hours available for producing X and Y. Consider the following information: Product X Product Y Required labor time per unit (hours) 2 3 Maximum demand (units) 6,000 8,000 Contribution margin per unit $ 5 $ 6 Contribution margin per labor hour $ 2.50 $ 2 If Kingston follows proper managerial accounting practices, how many units of Product Y should it produce

Answer 1

Answer:

                                                        Product X              Product Y

Required labor time per unit                 2                           3

Maximum demand                             6,000                    8,000

Contribution margin p/ labor hour    $2.50                    $2.00

Contributiom margin per unit              $5                         $6

Labor hours available                                    27,000

Production                                         6,000                    5,000

Required labor hours                      12,000                   15,000

Total contribution margin             $30,000               $30,000