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The following data is available for the products that a company manufactures: Sales price Costs: Direct material Direct labour Variable manufacturing overhead Fixed manufacturing overhead
The following data is available for the products that a company manufactures: Sales price Costs: Direct material Direct labour Variable manufacturing overhead Fixed manufacturing overhead Material required Direct labour hours required Machine hours required Product A Product B $120 $140 50 40 27 18 16 10 8 5 2.3 meters 3.0 meters 1.5 hours 1.0 hours 0.8 hours 0.5 hours The demand for each product exceeds the capacity of material available to produce them. Required: 1. Compute the amount of contribution margin (profitability index) for Product B given the indicated constraint. (3 marks) 2. If the company has the indicated constraint, what are two ways they can increase capacity at the bottleneck? (2 marks) Paragraph B I U + v Arial, sans-serif 12pt T Ea
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