QUESTION 1

1. Limited resource decision: Foles Manufacturing produces three products: X, Y, and Z. A limitation of 502 labor-hours per week prevents Foles from meeting the sales demands for its products. The product information is as follows:

product information

X Y Z

90 120 200

-50 -30 -160

$40 $90 $40

4 3 2

 

1. In addition, the maximum weekly demand for each product is:

 

Product Demand

X -100 units

Y-50 units

Z-70 units

1. The weekly production schedule for Product X under a short-run profit maximizing strategy would be ______ units.

2. The weekly production schedule for Product Y under a short-run profit maximizing strategy would be ______ units.

3 . The weekly production schedule for Product Z under a short-run profit maximizing strategy would be ______ units.

 

*The first thing to do is to compute for the Contribution Margin Per Labor Hour.

Product X= $10 per Hour (Contribution Margin Per Unit $40 / 4 hours)

Product Y= $30 per Hour (Contribution Margin Per Unit $90 / 3 hours)

Product Z= $20 per Hour (Contribution Margin Per Unit $40 / 2 hours)

Based From the computation of CM per Direct Labor, Product Y with the Highest should be prioritized, Followed by Product Z and Product X to be least prioritized.

Limited Labor Hours=502 hours

Product Y = 150 hours (50 units Limit x 3 hours per unit)

Product Z = 140 hours(70 units x 2 hours per unit)

Product x= 212 hours (502 limit less 150 hours for Y less 140 hours for Z)

1.The weekly production schedule for Product X under a short-run profit maximizing strategy would be 53 units. (212 hours /4 hours per Contribution Margin)

2. The weekly production schedule for Product Y under a short-run profit maximizing strategy would be 50 units. (Limit)

3 . The weekly production schedule for Product Z under a short-run profit maximizing strategy would be 70 units. (limit)