Banner Company produces three products: A, B, and C. The selling price, variable

Question

Banner Company produces three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:

Product

110

Due to a strike in the plant of one of its competitors, demand for the company%u2019s products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labor rate is $5 per hour, and only 3,290 hours of labor time are available each week.

Compute the amount of contribution margin that will be obtained per hour of labor time spent on each product. (Round your intermediate calculations and final answers to 2 decimal places.)

Which orders would you recommend that the company work on next week%u2014the orders for product A, product B, or product C?

By paying overtime wages, more than 3,290 hours of direct labor time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand for the three products? (Round your intermediate calculations and final answers to 2 decimal places.)

Banner Company produces three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:

Explanation / Answer

2.   so will recommend product A

Maximum amount = $29 per hour   

A B C 1. Contribution margin per unit $36.00 $38.50 $40.00 Direct labor $7.50 $25.00 $10.00 Direct labor rate per hour $5.00 $5.00 $5.00 Direct labor hours required per unit $1.50 $5.00 $2.00 CM per unit of limiting resource (DLH) $24.00 $7.70 $20.00

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