Question

E6.12 (LO 3), AN Dalton Inc. produces and sells three products. Unit data concerning each product is shown below. Product Compute contribution margin and determine the products to be manu- factured. D $300 $250 Selling price Direct labor costs Other variable costs $200 30 80 35 95 80 145 The company has 2,000 hours of labor available to build inventory in anticipation of the company's peak season. Management is trying to decide which product should be produced. The direct labor hourly rate is $10. Instructions a. Determine the number of direct labor hours per unit. b. Determine the contribution margin per direct labor hour. c. Determine which product should be produced and the total contribution margin for that product.

Answer 1

Prodcut D Prodcut E Prodcut F Selling Price Less: Direct Labor cost other Variable Cost Total Variable cost Labour rate per hour Number of Direct labor hours =30/10,80/10,35/10 Contribution Margin per Unit (Selling price-Variable cost) Contribution Margin per DLH (CM Per unit /DLH Per Unit ) 300.00 250.00 200.00 30.00 35.00 80.00 95.00 125.00 145.00 80.00 160.00 180.00 10.00 10.00 10.00 3.00 3.50 8.00 75,00 140.00 70.00 25.00 17.50 20.00 Answers Direct labour Hour per unit Prodcut D Prodcut E Prodcut F Contribution Margin per Direct Labor Hour 3.0 8.0 3.5 Prodcut D Prodcut E Prodcut F Contribution Margin per Direct Labor Hour 25.00 17.50 20.00 which Prodcut Should be Prodcued Prodcut D Total Contirbution Margin of Prodcut D 50000 |(25*2000)