Question

Brunson Tables Ltd. Manufactures three types of tables: wooden, plastic, and glass-surfaced. Data on price and costs for the units are shown below. Wooden Plastic Glass Price $82.00 $69.00 $108.00 Variable Cost $36.00 $27.00 $56.00 Allocated Fixed Cost $10.00 $10.00 $20.00 Profit per Unit $36.00 $32.00 $32.00 The allocated fixed cost, which is fixed manufacturing overhead, is allocated to the three products using a rate of $5 per direct labor hour consumed by the product. There are 1,000 uncommitted hours of direct labor that can be allocated to manufacturing more products. Do not enter dollar signs or commas in the input boxes. Round all answers to 2 decimal places. a) Which one of the three products should be produced using the available direct labor hours? Assume that Brunson Tables will be within capacity to produce and sell the additional units. Wooden Plastic Glass Price $Answer 82.00 $Answer 69.00 $Answer 108.00 Variable Cost $Answer 36.00 $Answer 27.00 $Answer 56.00 Contribution Margin Per Unit $

Answer 1

To determine which product should be produced using the available direct labor hours, calculate the contribution margin per unit for each product and choose the one with the highest value.

Step-by-step explanation:

To determine which product should be produced using the available direct labor hours, we need to calculate the contribution margin per unit for each product. The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit. Then, we can compare the contribution margin per unit for each product. The product with the highest contribution margin per unit should be produced using the available direct labor hours.

Let's calculate the contribution margin per unit for each product:

- Wooden table: $82.00 - $36.00 = $46.00

- Plastic table: $69.00 - $27.00 = $42.00

- Glass table: $108.00 - $56.00 = $52.00

Since the glass table has the highest contribution margin per unit ($52.00), it should be produced using the available direct labor hours.