Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost
ID: 2560373 • Letter: G
Question
Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows.
andriod bio-mutant cyclops
At the present time, demand for each of the company's products far exceeds its capacity to produce them. Thus, management is trying to determine which of its games to concentrate on next week in filling its backlog of orders. Gunst's direct labor rate is $12 per hour, and only 1,000 hours of direct labor are available each week.
Determine the maximum total contribution margin the company can make by its best use of the 1,000 available hours. (Do not round intermediate calculations.)
Selling price $ 100 $ 56 $ 125 Direct labor 48 24 60 Direct materials 9 8 16 Variable overhead 7 4 9Explanation / Answer
Since the bio-mutuant has highest contribution per hour therefore company can make (10 x 1000) $ 10000 as maximum contribution from 1000 hours
Particulars Andriod Bio-mutuant cyclops Sale Price 100.00 56.00 125.00 Less: Material 9.00 8.00 16.00 Less: Direct labor 48.00 24.00 60.00 Less: Variable Overhead 7.00 4.00 9.00 Contribution Per Unit (A) 36.00 20.00 40.00 No of Hours (labor cost/12) (B) 4.00 2.00 5.00 Contribution Per labor hour (A/B) 9.00 10.00 8.00 Rank II I IIIRelated Questions
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