Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labor rate is P8 per hour, and only 3,000 hours of labor time are available each week. Required: 1. Compute the amount of contribution margin that will be obtained per hour of time spent on each product. 2. Which orders would you recommend that the company work on next week - the orders for product X, product Y, or product Z? Show computations. 3. By paying overtime wages, more than 3,000 hours of direct labor time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand to the three products? Explain.

Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labor rate is P8 per hour, and only 3,000 hours of labor time are available each week. Required: 1. Compute the amount of contribution margin that will be obtained per hour of time spent on each product. 2. Which orders would you recommend that the company work on next week - the orders for product X, product Y, or product Z? Show computations. 3. By paying overtime wages, more than 3,000 hours of direct labor time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand to the three products? Explain.

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Description: Due to a strike in the plant of one of its competitors, demand for thecompany's products far exceeds its capacity to produce. Management istrying to determine which product(s) to concentrate on next week in fillingits backlog of orders. The direct l

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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