XYZ Corp produces three products, and is currently facing a labor shortage – only 3,000 hours are available this month The selling price, costs, labor requirements, and demand of the three products are as follows:
PRODUCT ==================>ABCSelling Price$5000$3000$4000Variable Cost Per Unit$3500$1000$3000Direct Labor Hours Per Unit1532Units Demanded10002000500
- In what order should XYZ Corp prioritize production of the products? List the letter of the product in the order of priority
- How many of each product should be produced (assuming all units will be sold during the period) during the labor shortage to maximize profit?
- What is the total contribution margin if XYZ Corp prioritizes production according to its limited resources?