Hydroflask water bottles produces three products, large mouth, small mouth and mini mouth water bottles. The company is currently facing a labor shortage; only 4,800 hours are available this month. The selling prices, costs, labor requirements, and demand for the three products are as follows: Sales price Variable cost per unit Direct labor hours per unit Demand (units) Large Mouth (Product A) $ 70.00 $ 53.00 2.1 1,200 Small Mouth (Product B) $ 38.00 $ 19.00 3.3 1,700 Mini Mouth (Product C) $ 52.00 $48.00 1.7 1,900 Required: a. In what order should Hydroflask prioritize production of the products? b. How many of each product should be produced during the labor shortage to maximize profit? c. What is the total contribution margin if Hydroflask prioritizes production according to its limited resources?
Hydroflask water bottles produces three products, large mouth, small mouth and mini mouth water bottles. The company is currently facing a labor shortage; only 4,800 hours are available this month. The selling prices, costs, labor requirements, and demand for the three products are as follows: Sales price Variable cost per unit Direct labor hours per unit Demand (units) Large Mouth (Product A) $ 70.00 $ 53.00 2.1 1,200 Small Mouth (Product B) $ 38.00 $ 19.00 3.3 1,700 Mini Mouth (Product C) $ 52.00 $48.00 1.7 1,900 Required: a. In what order should Hydroflask prioritize production of the products? b. How many of each product should be produced during the labor shortage to maximize profit? c. What is the total contribution margin if Hydroflask prioritizes production according to its limited resources?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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