EZ, Inc., manufactures two products that require both machine processing and labor operations. Although there is unlimited demand for both products, EZ could devote all its capacities to a single product. Unit prices, cost data, and processing requirements follow:

Next year, the company will be limited to 160,000 machine hours and 120,000 labor hours. Fixed costs for the year are $1, 500,000.
1. Compute the most profitable combination of products to be produced next year.
2. Prepare an income statement using the contribution margin format for the product volume computed in 1.

Product E Product Z Unit selling price Unit variable costs Machine hours per unit Labor hours per unit $70 S30 0.4 2.0 $230 90 14 6.0