Home Run Corporation produces three products for baseball enthusiasts: bats, gloves, and balls. Information relating to each product line is as follows:

Home Run pays its direct labor workers an average of $8 per hour. At full capacity, 60,000 direct labor hours are available per year. The marketing department has just released the following sales estimates for the upcoming year: bats (60,000 units), gloves (20,000 units), and balls (100,000 units). Based on these figures, demand for the current year is expected to exceed the company€™s direct labor capacity.

Instructions
a. What products should Home Run produce to maximize its operating income?
b. The company€™s marketing manager believes that the production of the least profitable product is needed to €œsupport€ the demand for the most profitable products. How may this influence management€™s decision regarding the company€™s productionschedule?

Transcribed Image Text:

Bats Gloves Balls Selling price Direct materials Direct labor. Variable overhead 2$48 $80$12 10 24 8 4