Clarity Corporation produces three sizes of television sets: 10 -inch screen, 19 -inch screen, and 24 inch
Question:
Clarity Corporation produces three sizes of television sets: 10 -inch screen, 19 -inch screen, and 24 inch screen. The revenues and costs per unit for each size are as follows:
\begin{tabular}{|c|c|c|c|}
\hline & \multicolumn{3}{|c|}{ Screen Size } \\
\hline & 10-inch & 19-inch & 24-inch \\
\hline Selling price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & $\underline{\$ 195}$ & $\$ 325$ & $\$ 450$ \\
\hline \multicolumn{4}{|l|}{ Variable costs: } \\
\hline Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & $\$ 55$ & $\$ 100$ & $\$ 126$ \\
\hline Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 80 & 120 & 180 \\
\hline Variable manufacturing overhead. . . . . . . . . . . . . . . . . & 40 & 60 & 90 \\
\hline Total variable costs. . . . . . . . . . . . . & $\underline{\$ 175}$ & $\underline{\$ 280}$ & $\$ 396$ \\
\hline Contribution margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . & $\underline{\underline{\$ 20}}$ & $\underline{\underline{\$ 45}}$ & $\$ 54$ \\
\hline Units ordered for next week. . . . . . . . . . . . . . . . . . . . . & 200 & 150 & 75 \\
\hline
\end{tabular}
The company has a constraint on the amount of skilled labor available to produce television sets. Direct labor employees are paid $\$ 8$ per hour. The total amount of labor time available for next week's production is 2,700 hours.
Required:
Given the units ordered for next week, which size or sizes of television sets should be produced and sold to maximize the company's profit?
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen