Question

Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Table A Table B Table C $ 41 $ 45 $ 59 Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 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 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. If Blossom has only 40,000 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. If Blossom has only 233,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 If Blossom has only 40,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.) Product Units Produced

Answer 1

Statement showing Contribution per unit Table A Table B Table C Sales Price 41 $ 45 $ Less: Variable costs Direct Material $ 7 $ 8 $ 9 Direct labor 1 $ 3 Ś Variable manufacturing 1 * 2 § 2 $ 2 Contribution per Table 31 $ 32 $ Requirement 2 - labour hours constraint Contribution per Table (a) 1 § 31 Labour hour per table (b) 0.5 Contribution per hour (a/b) $ 62 $ Ranking h 32 $ 0.5 64 $ 41 1.0 41 Computation of Units produced based upon 40000 labor hours Labor hours Total hours Particulars Demand per unit used Table B 20000 0.5 10000 Table A 50000 0.5 25000 Table C (balancing) 5000 1 5000 Balance hours 30000 5000 Therefore, Products Table A Table B Table C Units Produced 50000 20000 5000

Requirement 3 - Machine hour constraint Contribution per Table (a) $ 31 $ Machine hour per table (b) 4 Contribution per hour (a/b) $ 8 $ Ranking 32 2.5 13$ § 41 2.0 21 Ranking Products Table A Table B Table C 2 1 Requirement 4 - 233,000 Machine hours available Computatiion of Units produced based upon 233,000 machine hours Machine Total hours Balance Particulars Demand hours per used hours unit 2.0 60000 Table C Table B Table A (balancing) 30000 20000 30750 173000 123000 2.5 50000 123000 Products Table A Table B Table C Units Produced 30750 20000 30000

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