The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A, B, and C: A Selling price $60.00 Product B $150.00 C $100.00 Variable costs: Direct materials 24.00 52.50 49.00 Direct labour 15.00 50.00 20.00 Variable manufacturing overhead 3.00 10.00 4.00 Total variable cost 42.00 112.50 73.00 Contribution margin $18.00 $ 37.50 Contribution margin ratio 30% 25% $ 27.00 27% 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 labour rate Is $10 per hour, and only 3,870 hours of labour time are available each week. Required: 1. Compute the amount of contribution margin that will be obtained per hour of labour time spent on each product. (Round your Intermediate calculations to 1 decimal place. Round your answers to 2 decimal places.) Contribution margin per labour hour B 2. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product C O Product B O Product A 3. By paying overtime wages, more than 3,870 hours of direct labour 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 for the three products? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Maximum amount per hour
The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A, B, and C: A Selling price $60.00 Product B $150.00 C $100.00 Variable costs: Direct materials 24.00 52.50 49.00 Direct labour 15.00 50.00 20.00 Variable manufacturing overhead 3.00 10.00 4.00 Total variable cost 42.00 112.50 73.00 Contribution margin $18.00 $ 37.50 Contribution margin ratio 30% 25% $ 27.00 27% 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 labour rate Is $10 per hour, and only 3,870 hours of labour time are available each week. Required: 1. Compute the amount of contribution margin that will be obtained per hour of labour time spent on each product. (Round your Intermediate calculations to 1 decimal place. Round your answers to 2 decimal places.) Contribution margin per labour hour B 2. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product C O Product B O Product A 3. By paying overtime wages, more than 3,870 hours of direct labour 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 for the three products? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Maximum amount per hour
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A,
B, and C:
A
Selling price
$60.00
Product
B
$150.00
C
$100.00
Variable costs:
Direct materials
24.00
52.50
49.00
Direct labour
15.00
50.00
20.00
Variable manufacturing overhead
3.00
10.00
4.00
Total variable cost
42.00
Contribution margin
$18.00
112.50
$ 37.50
Contribution margin ratio
30%
25%
73.00
$ 27.00
27%
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 labour rate
Is $10 per hour, and only 3,870 hours of labour time are available each week.
Required:
1. Compute the amount of contribution margin that will be obtained per hour of labour time spent on each product. (Round your
Intermediate calculations to 1 decimal place. Round your answers to 2 decimal places.)
Contribution margin per labour hour
B
2. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C?
○ Product C
O Product B
○ Product A
3. By paying overtime wages, more than 3,870 hours of direct labour 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 for the three products? (Do not round
Intermediate calculations. Round your answer to 2 decimal places.)
Maximum amount
per hour
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