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, a single machine for all products. Data on the individual products follow. X-1 $ 112 $ 56 1.0 315,000 Price per unit Variable cost per unit Machine hours per unit Maximum units demand per period X-2 $ 212 $ 128 2.5 156,000 $ $ X-3 424 252 4.0 29,000 The single machine used for all three products has a maximum capacity of 558,000 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 327,000 hours (instead of 558,000 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. Required A Required B Required C Required D How many units of each product should be produced each period? X-1 X-2 315,000 units units units

Answer 1

a		Units Produced
	X-1	315,000	units
	X-2	50,800	units
	X-3	29,000	units
b	Maximum Amount Payable (20*33.6)		$672
c	Maximum Amount Payable (20*43)		$860
d	Required Machine Hours (558000+263000)		821,000

W.N
Per Unit	X-1	X-2	X-3
Price	$112	$212	$424
Variable cost	$56	$128	$252
Contribution Margin	$56	$84	$172
Machine Hours	1	2.5	4
Contribution Margin per Machine Hours	$56.0	$33.6	$43.0
Production Rankings	1st	3rd	2nd
	Available M.Hrs	M.Hrs per Unit	Max. Units Produced	Produced Hrs	Remaining M.Hrs
X-1	558,000	1.0	315,000	315,000	243,000
X-3	243,000	4.0	29,000	116,000	127,000
X-2	127,000	2.5	50,800	127,000	-
X-2 Unmet Demand	105,200
Additional Machine Hours (105200*2.5)	263,000