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Sales Price, Manufacturing Costs, and Gross Profit 6ft 8ft 10ft Sales Price $129 $169 $219 Direct Materials Cost Direct Labor Cost Variable Overhead Cost Fixed
Sales Price, Manufacturing Costs, and Gross Profit 6ft 8ft 10ft Sales Price $129 $169 $219 Direct Materials Cost Direct Labor Cost Variable Overhead Cost Fixed Overhead Cost Total Cost $50 $40 $8 $20 $118 $65 $40 $14 $20 $139 $80 $60 $20 $20 $180 Gross Profit $11 $30 $39 Production Requirements 6ft 8ft Direct Labor Hours 2.0 2.0 Linear Ft. of Lumber 140 180 10ft 3.0 300 Market Demand (units) 6ft Market Demand (units) 2,500 4,000 8ft 10ft 2,000 a) Assume that the company is limited to only 12,000 direct labor hours, because of staffing shortages. i. Calculate the contribution margin per direct labor hour for each of the three products and rank them from highest to lowest ii. If the company wants to maximize current profit, how many units of each product should it produce? b) Assume, instead, that the company is limited to only 1,250,000 linear ft. of lumber, because of import restrictions. i. Calculate the contribution margin per linear ft. of lumber for each of the three products and rank them from highest to lowest ii. If the company wants to maximize current profit, how many units of each product should it produce
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