Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Sales price Direct materials Direct labor Table A Table B Table C $ 60 13 $ 74 56 12 14 Variable manufacturing overhead Fixed manufacturing overhead 9. 9. 9. Required number of labor hours Required number of machine hours 0.50 4.00 0.50 2.50 1.00 2.00 Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows: Table A Table B Table C 60,000 units 20,000 units 20,000 units Required: 1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 2. If Blossom has only 50,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. 3. Suppose that the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 4. If Blossom has only 248,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit.
Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Sales price Direct materials Direct labor Table A Table B Table C $ 60 13 $ 74 56 12 14 Variable manufacturing overhead Fixed manufacturing overhead 9. 9. 9. Required number of labor hours Required number of machine hours 0.50 4.00 0.50 2.50 1.00 2.00 Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows: Table A Table B Table C 60,000 units 20,000 units 20,000 units Required: 1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 2. If Blossom has only 50,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. 3. Suppose that the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 4. If Blossom has only 248,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:
Transcribed Image Text:Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:
Sales price
Direct materials
Direct labor
Table A Table B Table C
$ 60
13
$ 74
56
12
14
Variable manufacturing overhead
Fixed manufacturing overhead
9.
9.
9.
Required number of labor hours
Required number of machine hours
0.50
4.00
0.50
2.50
1.00
2.00
Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model
follows:
Table A
Table B
Table C
60,000 units
20,000 units
20,000 units
Required:
1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production
by rank ordering the products from 1 to 3.
2. If Blossom has only 50,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to
maximize its profit.
3. Suppose that the number of machine hours has been identified as the most constrained resource. Determine how Blossom should
prioritize production by rank ordering the products from 1 to 3.
4. If Blossom has only 248,000 machine hours available, calculate the number of units of each table that Blossom should produce to
maximize its profit.
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