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 Table C $ 57 Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 7 ANW 0.5 0.5 1.0 Required number of labor hours Required number of machine hours 4.0 2.500 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

	Sales price				39	43	57
	Direct materials				6	7	8
	Direct labor				1	3	7
	Variable manufacturing overhead				2	2	2
	total variable cost				9	12	17
	contribution margin				30	31	40
1)	contribution margin				30	31	40
	Required number of direct hours				0.5	0.5	1
	Contribution margin per direct labor hr				60	62	40
	Ranking				2	1	3
	Product	Ranking
	Table A	2
	Table B	1
	Table C	3
2)	product	units
		produced
	Table B	20,000
	Table A	50,000
	Table C	5,000
3)
	contribution margin				30	31	40
	Required number of machine hours				4	2.5	2
	Contribution margin per direct labor hr				7.5	12.4	20
	Ranking				3	2	1
	Product	Ranking
	Table A	3
	Table B	2
	Table C	1
4)	product	units
		produced
	Table c	30,000			60000
	Table b	20,000			50,000
	Table A	30,250			121,000
					231,000