Blossom, Inc., is a small company that manufactures three versions of patio tabl
ID: 2531193 • Letter: B
Question
Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:
Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows:
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 40,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.)
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 232,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.)
Explanation / Answer
Answer 1 & 2 - Direct Labour Hours is bottleneck
Answer 3 & 4 - Machine Hours is Bottleneck
Table A Table B Table C Selling Price 40 44 58 Direct Material 6 7 8 Direct Labour 1 3 7 Variable Mfg. Overhead 2 2 2 Contribution Margin 31 32 41 Direct Labour Hours per unit 0.50 0.50 1.00 Contribution per Direct Labour Hour 62.00 64.00 41.00 Ranking of Production 2nd 1st 3rd Maximum Demand (in Units) 50,000 20,000 30,000 Total Direct Labour Hours Required 25,000 10,000 30,000 Total Direct Labour Hours allocated 25,000 10,000 5,000 Total Units to be produced 50,000 20,000 5,000