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imited Resources Assume Fender produces only three guitars: the Stratocaster, Dreadnought and Telecaster. A limitation of 7 2 0 labor hours per week prevents Fender

imited Resources
Assume Fender produces only three guitars: the Stratocaster, Dreadnought and Telecaster. A limitation of 720 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is as follows:
Stratocaster Dreadnought Telecaster
Unit selling price $1,056 $660 $1,386
Unit variable costs (660)(330)(1,188)
Unit contribution margin $396 $330 $198
Labor hours per unit 362436
Required
Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest.
1. Unit selling price.
2. Unit contribution margin.
3. Contribution per labor hour.
(Hint: Each situation is independent of the others.)
Highest
Unit
Selling Price Highest
Contribution
per Unit Highest
Contribution
per Labor Hour
Answer 1
Answer 2
Answer 3
Labor hours available Answer 4
0
Answer 5
0
Answer 6
0
Labor hours per unit Answer 7
0
Answer 8
0
Answer 9
0
Weekly production Answer 10
0
Answer 11
0
Answer 12
0
Unit contribution margin Answer 13
0
Answer 14
0
Answer 15
0
Weekly contribution Answer 16
0
Answer 17
0
Answer 18
0
Determine the opportunity cost the company will incur if management requires the weekly production of 20 Telecasters. Hint: You want to maximize short-run profit. Think about which guitar is most profitable.
$Answer 19
0

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