Kareem Industry produces three types of products: X, Y and Z. There is unlimited demand for the products throughout Southern Ontario. The following information is provided: X Y ZUnit selling price$60 $40 $20Unit contribution margin$30 $20 $10Processing time required per unit1.25 hours 0.8 hours 0.5 hours Processing time is limited to 180 hours per month. What product mix should Kareem choose in order to maximize overall profit? Multiple Choice Produce 70 units of X, 70 units of Y and 70 units of Z Produce 144 units of X Produce 225 units of Y Produce 360 units of Z Produce 85 units of X and 40 units of Y

First we need to rank the products on the basis of contribution per hour.

Answered: Kareem Industry produces three types of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kareem Industry produces three types of products: X, Y and Z. There is unlimited demand for the products throughout Southern Ontario. The following information is provided:

	X	Y	Z
Unit selling price	$60	$40	$20
Unit contribution margin	$30	$20	$10
Processing time required per unit	1.25 hours	0.8 hours	0.5 hours

Processing time is limited to 180 hours per month. What product mix should Kareem choose in order to maximize overall profit?

Multiple Choice

Produce 70 units of X, 70 units of Y and 70 units of Z
Produce 144 units of X
Produce 225 units of Y
Produce 360 units of Z
Produce 85 units of X and 40 units of Y

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