Question

Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Table A $ 56 Table B $ 60 Table C $ Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 12 5 55 Required number of labor hours Required number of machine hours e.se 4.00 0.50 2.50 1.ee 2.00 Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows: Table A Table B Table C 60,000 units 20,000 units 20,000 units Required: 1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 2. Blossom has only 50.000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. 3. Suppose that the number of machine hours has been identified as the most constrained resource Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 4. I Blossom has only 248,000 machine hours available, calculate the number of units of each table that Blossom should produce maximize its profit. Complete this question by entering your answers in the tabs below.

Answer 1

a.

particulars	table A	table B	table C
sale price	$ 56	$ 60	$ 74
Less : variable cost
direct materials	$ 12	$ 13	$ 14
direct labor	$ 3	$ 5	$ 9
variable manufacturing overhead	$ 5	$ 5	$ 5
contribution	$ 36	$ 37	$ 46
Labor hours	0.5	0.5	1
contribution per direct labor hour	$ 72	$ 74	$ 46
ranking as direct labor hours as bottleneck	2	1	3

b.

Total direct labor hours available = 50,000 hours

First B shall be produced then A and then C.

Table B units produced = 20,000 units

Labor hours required in B = 20,000 * 0.5 = 10,000 hours

Available hours = 50,000 -10,000 = 40,000 hours

Table A units produced = 60,000

Labor hours used = 60000 * 0.5 =30,000

Available hours = 10,000

Table C to be produced = 10,000 units

Product	Units produced
Table A	60,000
Table B	20,000
Table C	10,000

c.

particulars	table A	table B	table C
sale price	$ 56	$ 60	$ 74
Less : variable cost
direct materials	$ 12	$ 13	$ 14
direct labor	$ 3	$ 5	$ 9
variable manufacturing overhead	$ 5	$ 5	$ 5
contribution	$ 36	$ 37	$ 46
Machine hours	4	2.5	2
contribution per machine hours	$ 9	$ 14.8	$ 23
ranking as machine hours as bottleneck	3	2	1

d.

Available machine hours = 248,000 hours

	Table C	Table B	Table A
Available machine hours(A)	248,000	208,000	158,000
Maximum units	20,000	20,000	158,000/4 = 39,500
Machine hours per unit	2	2.5	4
Total machine hours used not exceeding availble (C )	40,000	50,000	158,000
Balance machine hours (A-C)	208,000	158,000	NIL

Product	Units produced
Table A	39,500
Table B	20,000
Table C	20,000