Question

Required Information The following information applies to the questions displayed below) Clarke Corporation manufactures three products (X-1. X-2 and X-3) utilizing in one of the processes, o single machine for all products. Data on the individual products follow. $ Price per unit Variable cost per unit Machine hours per unit Maximum units demand per period 4.0 340,000 166,888 44,660 The single machine used for all three products has a maximum capacity of 658,000 hours per period Required: a. How many units of each product should be produced each period? b. A local engineering firm has suggested to Clarke that it might be able to increase the capacity on the machine. What is the maximum Clarke would be willing to pay for an increase of twenty (20) machine hours? c. Suppose the maximum capacity on the machine was 372,000 hours (instead of 658,000 hours). What is the maximum Clarke would be willing to pay for an increase of twenty (20) machine hours? d. At what capacity (in machine hours) would the machine no longer be a bottleneck? Complete this question by entering your answers in the tabs below. Red Breddo How many units of each product should be produced each period?

Answer 1

Required A		X-1	X-2	X-3
a)	Price per unit	132	232	464
b)	Variable cost per unit	66	133	272
c)	Contribution margin per unit (a) - (b)	66	99	192
d)	Machine hours per unit	1	2.5	4
e)	Contribution margin per machine Hours	$66.00	$39.60	$48.00
	RANKING	1	3	2
	Max. units demand per period	340,000	166,000	44,000
	Hours required to produce maximum demand	340,000	415,000	176,000	931,000
	Available machine hours allocated	340,000	142,000	176,000	658,000
	Units to be produced	340,000	56,800	44,000
		(340,000/1)	(142,000/2.5)	(176,000/4)