Blossom, Incorporated, is a small company that manufactures three versions of patio tables. Unit information for its products follows: Table ATable BTable CSales price$ 43$ 47$ 61Direct materials789Direct labor137Variable manufacturing overhead333Fixed manufacturing overhead888Required number of labor hours0.500.501.00Required number of machine hours4.002.502.00Blossom has determined it can sell a limited number of each table in the upcoming year. Expected demand for each model follows:Table A50,000unitsTable B30,000unitsTable C20,000unitsRequired:Suppose direct labor hours have been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3.If Blossom has only 45,000 direct labor hours available, calculate the number of units of each table Blossom should produce to maximize its profit.Suppose the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3.If Blossom has only 235,000 machine hours available, calculate the number of units of each table Blossom should produce to maximize its profit.

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

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Blossom, Incorporated, is a small company that manufactures three versions of patio tables. Unit information for its products follows:

	Table A	Table B	Table C
Sales price	$ 43	$ 47	$ 61
Direct materials	7	8	9
Direct labor	1	3	7
Variable manufacturing overhead	3	3	3
Fixed manufacturing overhead	8	8	8
Required number of labor hours	0.50	0.50	1.00
Required number of machine hours	4.00	2.50	2.00

Blossom has determined it can sell a limited number of each table in the upcoming year. Expected demand for each model follows:

Table A	50,000	units
Table B	30,000	units
Table C	20,000	units

Required:

Suppose direct labor hours have been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3.
If Blossom has only 45,000 direct labor hours available, calculate the number of units of each table Blossom should produce to maximize its profit.
Suppose the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank, i.e., ordering the products from 1 to 3.
If Blossom has only 235,000 machine hours available, calculate the number of units of each table Blossom should produce to maximize its profit.

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