The Good Health Baking Company produces a salt-free whole-grain bread and a carob-chip cookie. The demand...

 

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The Good Health Baking Company produces a salt-free whole-grain bread and a carob-chip cookie. The demand for these products is exceeding Good Health's production capacity. The company has only 80,000 direct labor hours available. A case of bread requires one direct labor hour, while a case of cookies requires half a direct labor hour. The company estimates that it can sell 100,000 cases of bread and 60,000 cases of cookies in the next year. The following financial information is available: Bread Cookies Selling price per case $60 $40 Variable costs per case: Direct materials 14 3 Direct labor 8 Variable overhead 1 Variable marketing costs 2 (a) Calculate the contribution margin per direct labor hour. Bread Cookies Contribution margin per direct labor hour (b) How should Good Health allocate its production capacity between bread and cookies? Bread DLH Cookies DLH The Good Health Baking Company produces a salt-free whole-grain bread and a carob-chip cookie. The demand for these products is exceeding Good Health's production capacity. The company has only 80,000 direct labor hours available. A case of bread requires one direct labor hour, while a case of cookies requires half a direct labor hour. The company estimates that it can sell 100,000 cases of bread and 60,000 cases of cookies in the next year. The following financial information is available: Bread Cookies Selling price per case $60 $40 Variable costs per case: Direct materials 14 3 Direct labor 8 Variable overhead 1 Variable marketing costs 2 (a) Calculate the contribution margin per direct labor hour. Bread Cookies Contribution margin per direct labor hour (b) How should Good Health allocate its production capacity between bread and cookies? Bread DLH Cookies DLH

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Answer Bread Cookies Selling price 57 40 LessVariable costs Direct ma... View the full answer