Answered step by step
Verified Expert Solution
Question
1 Approved Answer
10 points Save Answer Bahrain Rubber Company (BRC) manufactures a line of speed humps. Demand for the company's products is increasing, and management requests assistance
10 points Save Answer Bahrain Rubber Company (BRC) manufactures a line of speed humps. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company provided the following data: Small humps size Product Demand next year (units Selling price Direct materials Direct labor Direct labor hours per unit 52,000 $33.40 $8.60 $12.80 0.80 Medium humps size 16,000 $53.20 $12.88 $22.40 1.40 Large humps size 125,000 $19.20 $6.40 $6.40 0.40 The following additional information is available: a. The company's plant has a capacity 100,000 direct labor-hours per year on a single- shift basis. The company's present employees and equipment can produce all three products. b. The direct labor rate of $16 per hour is expected to remain unchanged during the coming year. c. Fixed cost total $520,000 per year. Variable overhead costs are $4 per direct labor-hour. d. All the company's nonmanufacturing costs are fixed. Required: 1. How much variable overhead cost is incurred to manufacture one unit of each of the company's three products? 2. Assuming that direct labor-hours is the company's constraining resource, what is the contribution margin per direct labor-hour for each of the company's three products? Rank them in terms of profitability? 3. Which product has the largest contribution margin per unit? Why wouldn't this product be the most profitable use of the constrained resource in either case? the toolbar press ALT+510 (PC or ALT+EN+F10 (Mac)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started