Variable costing approach-maximizing profits


Problem: Products, Y or Z. Sales demand is unlimited for both products at current prices. Product Y requires 1 hour of machine time per unit of output and Product Z requires 2 hours of machine time per unit of output. The following information summarizes the per-unit costs of products Y and Z

                       Y       Z
Selling price    $75    $80
DM                   30       5
DL                    20     10
VOH                 10      20
FOH                   5       30

Based a variable costing approach, how would you maximize profits? Support your answer.

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