Question

The following analysis of selected data is for each of the two products Hillman Corporation provides. Product X Product Y Per-unit data @ 10,000 units Sales price…………………………………..... $51 $30 Product costs: Variable……………………………………… 14 10 Fixed………………………………………….. 9 6 Selling & administrative expenses: Variable …………………………………….. 7 4 Fixed ………………………………………….. 5 2 In Hillman’s operation, machine hour capacity is the company’s constraining resource. Each unit of X requires 4 machine hours, and each unit of Y requires 2 machine hours. Required: Indicate which product Hillman should emphasize (produce first). Explain why, showing necessary computations.

Answer 1

Ans)	Hillman Corporation
	Product	X	Y
	Units	10000	10000
	Selling Price	$    51.00	$    30.00
	Variable cost	$    21.00	$    14.00
	Fixed Cost manufacturing	$       9.00	$       6.00
	Fixed Selling Expenses	$       5.00	$       2.00
	Machine Hours	4	2
	Calculate Contribution Margin Per Machine Hours
	Product	X	Y
	Selling Price	$    51.00	$    30.00
	Variable cost($14+$7) for Product X,($10+$4)	$    21.00	$    14.00
	Contribution Margin	$    30.00	$    16.00
	Machine Hours	4	2
	Contribution Margin Per Machine Hours	$       7.50	$       8.00
	Contribution Magin of Product X is greater than Product Y but in case of limited resource i.e machine hours ,Product Y should be Produed first because contribution margin per machine hour of product Y is greater than Prodcut X