General Electric manufactures two types of refrigerators: 1-Door and 2-Door. Selected data related to each type of
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General Electric manufactures two types of refrigerators: 1-Door and 2-Door. Selected data related to each type of refrigerator is as follows:
1-Door | 2-Door | ||
Sales price | $300 | $400 | |
Direct materials | 25 | 50 | |
Direct labor | 30 | 40 | |
Variable overhead | 15 | 10 | |
Machine hours | 5 | 6 |
Total fixed manufacturing overhead is $500,000. Most of the manufacturing process is done by machines. For 2023, there is a maximum of 20,000 machine hours available. Management believes that demand is limited to 2,000 1-Door refrigerators and 3,000 2-Door refrigerators in 2023.
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