Company has only 4,000 machine hours available (the limited resource). Total production overheads (allocated on machine hours)
Question:
Company has only 4,000 machine hours available (the limited resource). Total production overheads (allocated on machine hours) is £12,000. The following information on the company's three products is available:
Product A:
Contribution per unit = £10
OH allocated per unit = £6
Product B:
Contribution per unit = £13
OH allocated = £4.50
Product C:
Contribution per unit = £5
OH allocated = £1.50
If sales demand is greater than available production, in what order should the products be produced to maximize profits (in the short-term)?
C first; A and B are equal
B first; A second; C third
A first; B second; C third
C first; A second; B third
C first; B second; A third
A first; B and C are equal
Materials Science and Engineering An Introduction
ISBN: 978-0470419977
8th edition
Authors: William D. Callister Jr., David G. Rethwisch