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 the limited supply of direct labor hours, which product should be produced first each month in order to maximize net income? (show all calculations). (2 marks) D. What is the maximum rate per hour the company should be willing to pay for additional direct labor hours in order to make the additional packages to satisfy the monthly demand? (1 mark) 13141498mana-8#
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