Exercise 20-12 Product D E F Direct labor LINK TO TEXT Product D Product E Produ
ID: 2542025 • Letter: E
Question
Exercise 20-12
Product
D
E
F
Direct labor
LINK TO TEXT
Product D
Product E
Product F
LINK TO TEXT
LINK TO TEXT
Exercise 20-12
Dalton Inc. produces and sells three products. Unit data concerning each product is shown below.Product
D
E
F
Selling price $ 197.4 $ 307.7 $ 257.8 Direct labor costs 33.6 91.8 38.4 Other variable costs 91 82 149The company has 2,500 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 $ 12 .
Explanation / Answer
1.
2.
3. Product D should be produced because it has highest Contribution margin per direct labor hour of $26.
Total contribution margin for product D = $26 x 2,500 = $65,000
Product D Product E Product F Direct labor costs $33.6 $91.8 $38.4 Direct labor hourly rate $12 $12 $12 Direct labor hours per unit 2.8 7.7 3.2Related Questions
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