1. Suppose that direct labor hours has been identified as the bottleneck resourc
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Question
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 50,000 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.)
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 250,000 machine 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.)
Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:Explanation / Answer
(1) Contribution margin per labor hours = (Sales price - Direct material - Direct labor - Variable overhead) / Labor hours
Product A: $(58 - 12 - 3 - 5 - 6) / 0.5 = $32 / 0.5 = $64
Product B: $(62 - 13 - 5 - 6 - 5) / 0.5 = $33 / 0.5 = $66
Product C: $(76 - 14 - 9 - 6 - 5) / 1 = $42 / 1 = $42
So,
Table A: Rank 2
Table B: Rank 1
Table C: Rank 3
(2)
Hours required to make 20,000 units of B = 20,000 x 0.5 = 10,000
Hours required to make 20,000 units of A = 60,000 x 0.5 = 30,000
Hours left = 50,000 - 10,000 - 30,000 = 10,000
Number of units of C = 10,000 / 1 = 10,000
Note: First 2 questions are answered.
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