In which order should the company produce X, Y and Z? 1 answer below »
Oregon Company produces three products, X, Y, and Z. Data concerning the three products are as follows:
X
Y
Z
Selling price
$80.00
$56.00
$70.00
Variable expenses:
Direct materials
24.00
15.00
9.00
Direct labor
14.00
13.00
15.00
Other variable expenses
10.00
14.00
25.00
Contribution margin
$32.00
$14.00
$14.00
Demand for the company’s products is very strong, with far more order each month than the company can produce with the available raw materials. The same material is used in each product. The material cost $3 per pound, with a maximum of 5,000 pounds available each month.
Required: In which order should the company produce X, Y and Z?