Suppose that Ikea, the Swedish retailer, is developing a new chair targeted to sell for less than $100 and that it is considering the following two production alternatives. Rank the alternatives, assuming that the company’s minimum desired profit is 30 percent over total productioncosts.

Alternative A Alternative B Direct material costs Direct labor cost Overhead costs $35 I hour at 12 per hour 200 percent of direct $20 2 hours at $8 per hour $2 per dollar of direct labor costs materials