Excel Corporation manufactures three products at its plant The plant capacity is limited to 200,000 machine hours per year on a single shift basis Direct material and direct labor costs are variable The following data are available for planning purposes E (Click the icon to view the data ) Product Total unit demand for next year Sales price per unit Direct materials cost per unit Direct labor cost per unit Variable overhead cost per unit Machine hours per unit XL1 280000 11 50 4 3 3 0 3 XL2 280000 11 30 4 30 2 5 2 5 0 4 XL3 280000 10 00 4 8 2 1 2 1 0 25 Requirements (a) Given the capacity constraint, determine the production levels for the three products that will maximize profits (b) If the company authorizes overtime in order to produce more units of XL3, the direct labor cost per unit will be higher by 50 because of the overtime premium Materials cost and variable overhead cost per unit will be the same for overtime production as regular production Is it worthwhile operating overtime

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Question: Excel Corporation manufactures three products at its plant The plant capacity is limited to 200,000 machine hours per year on a single-shift basis Direct material

Excel Corporation manufactures three products at its plant The plant capacity is limited to 200,000 machine hours per year on a single-shift basis Direct material and direct labor costs are variable. The following data are available for planning purposes E (Click the icon to view the data.)

Product

Total unit demand for next year

Sales price per unit

Direct materials cost per unit

Direct labor cost per unit

Variable overhead cost per unit

Machine hours per unit

XL1

280000

11.50

0.3

XL2

280000

11.30

4.30

2.5

0.4

XL3

280000

10.00

4.8

2.1

0.25

Requirements

(a) Given the capacity constraint, determine the production levels for the three products that will maximize profits

(b) If the company authorizes overtime in order to produce more units of XL3, the direct labor cost per unit will be higher by 50% because of the overtime premium. Materials cost and variable overhead cost per unit will be the same for overtime production as regular production. Is it worthwhile operating overtime?

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