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

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