Jaffa Limited produces three products—X, Y, & Z—with the following characteristics: X X Y Y Z Z Selling price per unit $20 100% $16 100% $20 100% Variable cost per unit 12 60% 12 75% 8 40% Contribution margin per unit $8 40% $4 25% $12 60% Machine hours per unit 5 3 4 The company has only a limited number of machine-hours available each month. If demand exceeds the company's capacity, in what sequence should orders be filled if the company wants to maximize its total contribution margin? Multiple Choice a)Orders for Y first, X second, and Z third. b)Orders for X first, Z second, and Y third. c)Orders for Z first, Y second and X third d)Orders for Z first, X second, and Y third. e)Orders for Y only

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Chapter3: Cost-volume-profit Analysis
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16. 

Jaffa Limited produces three products—X, Y, & Z—with the following characteristics:
 

  X X Y Y Z Z
Selling price per unit $20 100% $16 100% $20 100%
Variable cost per unit 12 60% 12 75% 8 40%
Contribution margin per unit $8 40% $4 25% $12 60%
Machine hours per unit 5   3   4  


The company has only a limited number of machine-hours available each month. If demand exceeds the company's capacity, in what sequence should orders be filled if the company wants to maximize its total contribution margin?

 

Multiple Choice
 
a)Orders for Y first, X second, and Z third.
 
b)Orders for X first, Z second, and Y third.
 
c)Orders for Z first, Y second and X third
 
d)Orders for Z first, X second, and Y third.
 
e)Orders for Y only
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