Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Required number of labor hours Required number of machine hours Table A $50 10 2 49 0.50 4.00 loscom has determined it can coll a limited number of each table in the

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Blossom, Incorporated, is a small company that manufactures three versions of patio tables. Unit information for its products follows:
Sales price
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Required number of labor hours
Required number of machine hours
Table A
Table B
Table C
$ 50
$54
$ 68
10
11
12
2
4
8
4
4
4
9
9
9
0.50
4.00
0.50
2.50
1.00
2.00
Blossom has determined 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
Required:
50,000 units
25,000 units
25,000 units
1. Suppose direct labor hours have been identified as the bottleneck resource. Determine how Blossom should prioritize production
by rank, i.e., ordering the products from 1 to 3.
2. If Blossom has only 60,000 direct labor hours available, calculate the number of units of each table Blossom should produce to
maximize its profit.
3. Suppose the number of machine hours has been identified as the most constrained resource. Determine how Blossom should
prioritize production by rank, i.e., ordering the products from 1 to 3.
Transcribed Image Text:Blossom, Incorporated, is a small company that manufactures three versions of patio tables. Unit information for its products follows: Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Required number of labor hours Required number of machine hours Table A Table B Table C $ 50 $54 $ 68 10 11 12 2 4 8 4 4 4 9 9 9 0.50 4.00 0.50 2.50 1.00 2.00 Blossom has determined 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 Required: 50,000 units 25,000 units 25,000 units 1. Suppose direct labor hours have been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3. 2. If Blossom has only 60,000 direct labor hours available, calculate the number of units of each table Blossom should produce to maximize its profit. 3. Suppose the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3.
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