Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:
| | Table A | Table B | Table C |
| Sales price | $ | 39 | $ | 43 | $ | 57 |
| Direct materials | | 6 | | 7 | | 8 |
| Direct labor | | 1 | | 3 | | 7 |
| Variable manufacturing overhead | | 2 | | 2 | | 2 |
| Fixed manufacturing overhead | | 4 | | 4 | | 4 |
| | | | | | | |
| Required number of labor hours | | 0.50 | | 0.50 | | 1.00 |
| Required number of machine hours | | 4.00 | | 2.50 | | 2.00 |
| |
Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows:
| | | |
| Table A | 50,000 | units |
| Table B | 20,000 | units |
| Table C | 30,000 | units |
| |
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. 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 231,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit.
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