Practice 4:Port-a-Home Ltd (PL) produces two lines of mobile homes: Doublewide and singlewide. Unit cost and revenue data pertaining to each product are shown below: Double Wide SingleWideSelling Price $70000 $40000Total Variable Cists $45000 $20000Each doublewide home requires 350 different labor hours and 125 machine hours. Each singlewide home requires 175 direct labor hours and 150 machine hours. Demand for each line of homes far exceeds the company's total production capacity. If PL's production capacity is constrained by limited direct labor hours, which line of homes should it produce? If PL's total production capacity is constrained by machine hours, which line of homes should it produce? Assume PL now has a labor capacity for the coming year of 875,000 hours. New market information has determined that the demand for single-wide trailers will be 3000 and the demand for double-wide trailers will be 2000 for the coming year. (Assume machine hours is not a constrained resource.) What should PL’s production schedule look like for the coming year? What production mix would optimize profits? Practice 4:Port-a-Home Ltd (PL) produces two lines ofbile homes: Doublewide and singlewide.Unit cost and revenue data pertaining to each product are shown belowDouble-wide$70,000Single-wide$40,00020,000Selling price.Total variable costs.45,000urs and 125 machirdoublewide home requires 350 differessinglewide home requires 175 direct labor hours and 150 machine hours. Demand for eachlaborhours. Eadline of homes far exceeds the company's total production capacity.(a) If PL's production capacity is constrained by limited direct labor hours, which line ofhomes should it produce?If PL's total production capacity is constrained by machine hours, which line ofhomes should it produce?Assume PL now has a labor capacity for the coming year of 875,000 hours. New marketinformation has determined that the demand for single-wide trailers will be 3000 and thedemand for double-wide trailers will be 2000 for the coming year. (Assume machine hours isnot a constrained resource.) What should PL's production schedule look like for the comingyear? What production mix would optimize profits?

When resources for production are contrained, the line of product generating maximum contribution…

Answered: Practice 4: Port-a-Home Ltd (PL)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Practice 4:

Port-a-Home Ltd (PL) produces two lines of mobile homes: Doublewide and singlewide. Unit cost and revenue data pertaining to each product are shown below:

Double Wide SingleWide

Selling Price $70000 $40000

Total Variable Cists $45000 $20000

Each doublewide home requires 350 different labor hours and 125 machine hours. Each singlewide home requires 175 direct labor hours and 150 machine hours. Demand for each line of homes far exceeds the company's total production capacity.

If PL's production capacity is constrained by limited direct labor hours, which line of homes should it produce?

If PL's total production capacity is constrained by machine hours, which line of homes should it produce?

Assume PL now has a labor capacity for the coming year of 875,000 hours. New market information has determined that the demand for single-wide trailers will be 3000 and the demand for double-wide trailers will be 2000 for the coming year. (Assume machine hours is not a constrained resource.) What should PL’s production schedule look like for the coming year? What production mix would optimize profits?

Practice 4:
Port-a-Home Ltd (PL) produces two lines ofbile homes: Doublewide and singlewide.
Unit cost and revenue data pertaining to each product are shown below
Double-wide
$70,000
Single-wide
$40,000
20,000
Selling price.
Total variable costs.
45,000
urs and 125 machir
doublewide home requires 350 differes
singlewide home requires 175 direct labor hours and 150 machine hours. Demand for each
labor
hours. Ead
line of homes far exceeds the company's total production capacity.
(a) If PL's production capacity is constrained by limited direct labor hours, which line of
homes should it produce?
If PL's total production capacity is constrained by machine hours, which line of
homes should it produce?
Assume PL now has a labor capacity for the coming year of 875,000 hours. New market
information has determined that the demand for single-wide trailers will be 3000 and the
demand for double-wide trailers will be 2000 for the coming year. (Assume machine hours is
not a constrained resource.) What should PL's production schedule look like for the coming
year? What production mix would optimize profits?

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