The Gant Company produces three items in its manufacturing plant. The plant has a total capacity of
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Question:
The Gant Company produces three items in its manufacturing plant. The plant has a total capacity of 9,600 minutes per month for production. The following information is provided for the products:
| Products | ||
| X | Y | Z |
Direct material | $16 | $10 | $14 |
Direct labor (all variable) | 15 | 14 | 15 |
Variable overhead | 2 | 3 | 4 |
Fixed overhead | 20 | 23 | 30 |
Unit cost | $53 | $50 | $63 |
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|
|
|
Minutes required per unit | 5 | 4 | 6 |
Selling price per unit | $70 | $65 | $80 |
Variable selling expense per unit | $5 | $4 | $2 |
Monthly demand in units | 2,200 | 1,000 | 800 |
Required:
- Calculate the contribution margin produced if the # of units determined in part (b) are produced.
- What is the opportunity cost of the capacity constraint?
Related Book For
Operations Management Creating Value Along the Supply Chain
ISBN: 978-0470525906
7th Edition
Authors: Roberta S. Russell, Bernard W. Taylor
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