Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Short-Term Product-Mix Decision DVD Production Company produces two basic types of video games, Flash and Clash. Pertinent data for DVD Production Company follow: Flash Clash

image text in transcribed

Short-Term Product-Mix Decision DVD Production Company produces two basic types of video games, Flash and Clash. Pertinent data for DVD Production Company follow: Flash Clash Sales price $ 280 $ 155 Costs Direct materials 55 25 Direct labor (@ $25/hour) 100 50 Variable factory overhead* 55 Fixed factory overhead* Marketing costs (all fixed) 15 Total costs $ 250 Operating profit $ 30 $ 5 *Based on direct labor hours: 4 direct labor hours (DLHs) per unit of Flash and 2 DLHs per unit of Clash. 25 50 15 10 $ 150 The DVD game craze is at its height so that either Flash or Clash alone can be sold to keep the plant operating at full capacity. However, labor capacity in the plant is insufficient to meet the combined demand for both games. Flash and Clash are processed through the same production departments. Required: 2a. Calculate the contribution margin per labor hour for both Flash and Clash. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Flash Clash Contribution margin per labor hour $ 12.50 $ 20.00 2b. Which of the two products should be produced? Flash Clash

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Costing

Authors: Terry Lucey

6th Edition

0826455107, 9780826455109

More Books

Students also viewed these Accounting questions

Question

Be able to explain the concept of constructive discharge

Answered: 1 week ago