Smith Manufacturing Has 27,000 Labour Hours Available for Producing X

Smith Manufacturing has 27,000 labour hours available for producing X and Y. Consider the following information: $\begin{array} { | l | c | c | c | } \hline & \text { Product X } & & \text { Product Y } \\\hline \text { Required labour time per unit (hours) } & 2 && 3 \\\hline \text { Maximum demand (units) } & 6,000 && 8.000 \\\hline \text { Contribution margin per unit } & \$ 5.00& & \$ 6.00 \\\hline \text { Contribution margin per labour hour } & \$ 2.50 && \$ 2.00 \\\hline\end{array}$ If Smith follows proper managerial accounting practices, which of the following production schedules should the company set? $\begin{array} { | l | r | r | r | } \hline & \text { Product X } & & \text { Product Y } \\\hline 1 & 0 \text { units } && 8,000 \text { units } \\\hline 2 & 1,500 \text { units } & & 8,000 \text { units } \\\hline 3 & 6,000 \text { units } & &0 \text { units } \\\hline 4 & 6.000 \text { units } && 5.000 \text { units } \\\hline 5 & 6.000 \text { units } && 8.000 \text { units } \\\hline\end{array}$

A) 1
B) 2
C) 3
D) 4
E) 5

Correct Answer:

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