Question

Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Table A $ 39 Table B $ 43 7 Table C $ 57 Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead met Required number of labor hours Required number of machine hours 0.50 4.00 0.50 2.50 1.00 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 50,000 units 20,000 units 30,000 units

Answer 1

Part-1
Statement showing Rank ordering the product - Blossom Inc.
	Table A	Table B	Table C
Sales price (a)	$39.00	$43.00	$57.00
Variable Cost:
Direct Material	$6.00	$7.00	$8.00
Direct Labour	$1.00	$3.00	$7.00
Variable Manufacturing Overhead	$2.00	$2.00	$2.00
Total Variable Cost (b)	$9.00	$12.00	$17.00
Contribution (c=a-b)	$30.00	$31.00	$40.00
Labour Hour Required Per Unit (d)	0.5	0.5	1
Contribution Per Labour Hour (c/d)	$60.00	$62.00	$40.00
Ranking	2	1	3

Part-2
Total Labour Available	40000
First will be utilitsed to produce Table -B (20000 UnitX 0.5 Hour)	10000
Secondly will be utilitsed to produce Table -A (50000 UnitX 0.5 Hour)	25000
Remaining to be Used for Table C	5000
No of Unit can produced for Table C (5000/1)	5000 Unit
No. of Unit to be Produced
Table A	50000 Unit
Table B	20000 unit
Table C	5000 Unit

Part-3
Statement showing Rank ordering the product
	Table A	Table B	Table C
Sales price (a)	$39.00	$43.00	$57.00
Variable Cost:
Direct Material	$6.00	$7.00	$8.00
Direct Labour	$1.00	$3.00	$7.00
Variable Manufacturing Overhead	$2.00	$2.00	$2.00
Total Variable Cost (b)	$9.00	$12.00	$17.00
Contribution (c=a-b)	$30.00	$31.00	$40.00
Machine Hour Required Per Unit (d)	4	2.5	2
Contribution Per Labour Hour (c/d)	$7.50	$12.40	$20.00
Ranking	3	2	1
Part-4
Total Machine Hour   Available	231000
First will be utilitsed to produce Table -C (30000 UnitX 2Hour)	60000
Remainin will be utilitsed to produce Table -B (20000 Unit X 2.5)	50000
Remainin Hour	121000
No of Unit can produced for Table A (121000/4)	30250
No. of Unit to be Produced
Table A	30250 unit
Table B	20000 unit
Table C	30000 unit