Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour): Clash Slash Sales price

Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour):

Clash Slash
Sales price (per unit) $ 300 $ 228
Costs (per unit):
Direct materials 73 37
Direct labor 48 72
Variable factory overhead (@ $15 per DLH) 60 30
Allocated fixed factory overhead (based on DLHs) 24 12
Marketing expenses (all variable) 41 30
Total costs 246 181
Operating income (per unit) $ 54 $ 47

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

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

Principles Of Cost Accounting

Authors: Robert E. Schmiedicke, Edward J. Vanderbeck

11th Edition

0538873426, 978-0538873420

More Books

Students also viewed these Accounting questions