Question
Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour): ClashSlashSales price (per unit)$390$318Costs
Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour):
ClashSlashSales price (per unit)$390$318Costs (per unit):Direct materials8246Direct labor6690Variable factory overhead (@ $15 per DLH)6030Allocated fixed factory overhead (based on DLHs)2412Marketing expenses (all variable)5039Total costs282217Operating income (per unit)$108$101
There is insufficient labor capacity (i.e., DLHs) in the plant to meet the combined demand for both Clash and Slash.
Both products are produced through the same production departments.
In view of the labor shortage, which of the two products is most profitable, and how much is the contribution margin, per DLH?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started