Limited Resources Assume Fender produces only three guitars: the Stratocaster, Dreadnought and Telecaster. A limitation of 720 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is as follows: Stratocaster Dreadnought Telecaster $768 $480 $1,008 (480) (240) (864) $288 $144 Unit selling price Unit variable costs Unit contribution margin Labor hours per unit Required Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest. 1. Unit selling price. 2. Unit contribution margin. Labor hours available Labor hours per unit 3. Contribution per labor hour. (Hint: Each situation is independent of the others.) Weekly production Unit contribution margin Weekly contribution Answer Answer Answer 36 Highest Unit Selling Price AnswerDreadnoughtStatocaster Telecaster AnswerDreadnoughtStatocasterTelecaster $Answer $240 $Answer 24 36 Answer Answer Answer $Answer Highest Contribution per Unit $Answer Highest Contribution per Labor Hour AnswerDreadnoughtStatocasterTele Answer Answer Answer $Answer $Answer Determine the opportunity cost the company will incur if management requires the weekly production of 20 Telecasters.

Limited Resources Assume Fender produces only three guitars: the Stratocaster, Dreadnought and Telecaster. A limitation of 720 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is as follows: Stratocaster Dreadnought Telecaster $768 $480 $1,008 (480) (240) (864) $288 $144 Unit selling price Unit variable costs Unit contribution margin Labor hours per unit Required Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest. 1. Unit selling price. 2. Unit contribution margin. Labor hours available Labor hours per unit 3. Contribution per labor hour. (Hint: Each situation is independent of the others.) Weekly production Unit contribution margin Weekly contribution Answer Answer Answer 36 Highest Unit Selling Price AnswerDreadnoughtStatocaster Telecaster AnswerDreadnoughtStatocasterTelecaster $Answer $240 $Answer 24 36 Answer Answer Answer $Answer Highest Contribution per Unit $Answer Highest Contribution per Labor Hour AnswerDreadnoughtStatocasterTele Answer Answer Answer $Answer $Answer Determine the opportunity cost the company will incur if management requires the weekly production of 20 Telecasters.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 62P

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