Question
In: Accounting
dKristen Company manufactures three products: X, Y, and Z. The demand for each product is 100...
dKristen Company manufactures three products: X, Y, and Z. The demand for each product is 100 units. The selling price, variable expenses, and contribution margin for one unit of each product follow:
|
Product |
|||
|
X |
Y |
Z |
|
|
Selling price |
$140 |
$300 |
$390 |
|
Less variable expenses (Only Special steel) |
50 |
100 |
150 |
|
Contribution margin |
$90 |
$200 |
$240 |
|
Steel need to make 1 unit |
1 kg |
2 kg |
3 kg |
The same special steel is used for all three products. 1 kg of the
steel costs $50. Kristen can buy up to 400 kgs.
Assume that Kristen can also buy Product Y from an importer and resell it. The purchase price of Y would be $270 per unit. In this case, in what order does the company have to make the products?
| A. |
X è Z è Y |
|
| B. |
Y è Z è X |
|
| C. |
Y è X è Z |
|
| D. |
Z è X è Y |
|
| E. |
X è Y è Z |
Solutions
Expert Solution
| CALCULATION OF CONTRIBUTION PER UNIT OF MATERIAL - SPECIAL STTEL | |||
| Product X | Product Y | Product Z | |
| Selling Price Per unit | $ 140.00 | $ 300.00 | $ 390.00 |
| Less: Variable Costs | $ 50.00 | $ 100.00 | $ 150.00 |
| contribution Margin (A) | $ 90.00 | $ 200.00 | $ 240.00 |
| Required Number of Special steel | 1 KG | 2 KG | 3 KG |
| Contribution per unit per Minuts =(A/B) | $ 90.00 | $ 100.00 | $ 80.00 |
| Ranking on the basis of per minute contribution | II nd X | Ist Y | III rd Z |
| So as per ranking we can produce the product | |||
|
Answer = Option C. Y è X è Z |
|||
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