Grissom Products installs standard and deluxe storage sheds. Most of the install

Question

Grissom Products installs standard and deluxe storage sheds. Most of the installation process of the sheds is done using direct labor. There are a maximum of 24,000 direct labor hours available each year.

Selected data related to each product is as follows:

Standard

Deluxe

Sales price per unit

$2,000

$4,000

Direct materials per unit

350

600

Direct labor per unit

250

350

Variable overhead per unit

100

200

Direct labor hours per unit

4

6

The company believes that there is sufficient demand for the sale and installation of up to 4,000 standard and 2,500 deluxe sheds each year.

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Description Standard Deluxe Sales 2000 4000 Direct Material 350 600 Direct Labor 250 350 Variable Overhead 100 200 Contribution 1300 2850 Contribution Per Direct Labor Hour 325 475


Total Hours Available 24000
Deluxe Installation 2500
Standard Installation 2250

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