ABC Company produces three products in the same plant. Fixed overhead costs are
ID: 2468469 • Letter: A
Question
ABC Company produces three products in the same plant. Fixed overhead costs are applied to products based on variable production costs. Per unit data for the three products are as follows:
Akers Brody Case
Selling price $80 $32 $45
Production costs:
Variable production costs: 47 17 31
Fixed overhead costs 24 12 14
Special polishing hours needed 6 3 2
Assume these three products all must be polished by one of five trained employees. What should be the priority ranking (highest to lowest) of the three products to maximize profits?
a. Brody, Case, and Akers
b. Case, Akers, and Brody
c. Akers, Brody, and Case
d Case, Brody, and Akers
Explanation / Answer
Statement showing computations Particulars Akers Brody Case Selling Price 80.00 32.00 45.00 Variable Production Costs 47.00 17.00 31.00 Contribution = SP-VC 33.00 15.00 14.00 Special polishing hours needed 6.00 3.00 2.00 Contribution per Hour 5.50 5.00 7.00 Ranking 2.00 3.00 1.00 In the above case Employees special polishing hours are limited