Suppose that Sleek Manufacturing is developing a new table targeted to sell for less than $10 and that it is considering the two production alternatives that follow. Rank the alternatives, assuming that the company's minimum desired profit is 40 percent over total production costs.
................................................Alternative........................ A Alternative B
Direct material costs............................. ......$2...................................... $2
Direct labor cost............. 0.25 hour at $10 per hour............. 0.20 hour at $12 per hour
Overhead costs....... 50 percent of direct labor costs.. $0.40 per dollar of direct materials