Question
Durham Corporation manufactures two products: X and Y. Both products are sold in 1-kg packages. The demand per month for each product is: X: 300
Durham Corporation manufactures two products: X and Y. Both products are sold in 1-kg packages. The demand per month for each product is: X: 300 packages Y: 240 packages Both products use the same processing area of the factory. Additional information per package for each product follows: Product: Selling price Direct labor cost Other variable costs Y $80 $133 10 20 65 105 There are only 300 direct labor hours in total available per month for these two products. The direct labor rate is $20 per hour. Required: A. Compute the contribution margin per package for each product. (2 marks) B. For each product, compute the number of direct labor hours required per package. (1 mark) C. Given that only 300 direct labor hours are available, which product should be produced first each month in order to maximize net income? Show work to justify your answer. (2 marks) Show all calculations for full marks
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