Blossom, Inc., is a small company that manufactures three versions of patio tabl
ID: 2436306 • Letter: B
Question
Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:
Blossom, Inc., Is a small company that manufactures three versions of patio tables. Unit information for its products tollows Table A Table B Table C S 50 S 54 68 Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 12 Required number of labor hours Required number of machine hours 0.5 4.0 1.0 2.0 2.50 Blossom has detemined that it can sell a limited number of each table in the upcoming year. Expected demand for each model tollows Table A Table B Table C 50,000 units 25,000 units 25,000 units Required: 1. Suppose that direct labor hours has been identified as the bottleneck resource. Detemine how Blossom should priontize production by rank ordering the products from 1 to 3. Product Table A Table B Table C RankingExplanation / Answer
A B C Selling price 50 54 68 Less: Variable cost Material 10 11 12 Labor 2 4 8 Variable manufacturing cost 4 4 4 Contribution margin per unit 34 35 44 Divide: Labor hour per unit 0.5 0.5 1 Contribution margin per DLH 68 70 44 Ranking II I III Req 1: Product Ranking Table A Second Table B First table C Third Req 2: Total Labour hours 60000 Less: Used in Table B (25000*0.5) 12500 Less: Used in Table A (50000*0.5) 25000 Hours available for Tabble C 22500 Number of units of C (22500/1) 22500 Product Number of units Table A 50000 Table B 25000 table C 22500 Req 3: A B C Selling price 50 54 68 Less: Variable cost Material 10 11 12 Labor 2 4 8 Variable manufacturing cost 4 4 4 Contribution margin per unit 34 35 44 Divide: MH per unit 4 2.5 2 Contribution margin per DLH 8.5 14 22 Ranking III II I Product Ranking Table A THird Table B Second table C Third Req 4 Total MH 242000 Less: Used in Table 2 (25000*2) 50000 Less: Used in Table B (25000*2.5) 62500 Hours available for Table A 129500 Number of units of A (129500/4) 32375 Product Number of units Table A 32375 Table B 25000 table C 25000