Question

Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows:     

		Table A		Table B		Table C
Sales price		$	55	$	59	$	73
Direct materials			11		12		13
Direct labor			3		5		9
Variable manufacturing overhead			5		5		5
Fixed manufacturing overhead			8		8		8
Required number of labor hours			0.5		0.5		1.0
Required number of machine hours			4.0		2.50		2.0

Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows:

Table A	60,000	units
Table B	20,000	units
Table C	20,000	units

Required:
1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3.



2. If Blossom has only 50,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.)



3. Suppose that the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3.



4. If Blossom has only 247,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.)

Answer 1

Solution:-
1.
	Table A	Table B	Table C
Sales Price	55	59	73
Direct Materials	11	12	13
Direct Labour	3	5	9
Variable M/f Overheads	5	5	5
Fixed M/F Overheads	8	8	8
Profit	28	29	38
Labour Hours	0.5	0.5	1
Profit per Labour Hour	56	58	38
Ranking	1st	1st	2nd
2. As per the rankings, we should produce the following units of prodcuts if labour hours is 36000
Table A:- 60000*0.5= 30000 Hrs
Remaining Labour Hours:- 50000-30000= 20000 hrs
Table= 20000*0.5= 10000 Hrs
Remaing Labour Hours:- 20000-10000= 10000hrs
Table C:- 10000/1= 10000 units
Units Produced as follwos:-
Table A:- 60000 units
Table B:- 20000 units'
Table C:- 10000 units
3.
	Table A	Table B	Table C
Sales Price	55	59	73
Direct Materials	11	12	13
Direct Labour	3	5	9
Variable M/f Overheads	5	5	5
Fixed M/F Overheads	8	8	8
Profit	28	29	38
Machine hours	4	2.5	2
Profit per Machine Hour	7	11.6	19
Ranking	3rd	2nd	1st
4. Calculation of Units Produced if we are having availbale machine hours to 247000 hrs:-
Table C:- 20000*2 = 40000hours
Remaining Hours:- 247000-40000 = 207000 hours
TableB:- 20000*2.5= 50000 hrs
Remaining Hours:- 207000-50000 = 157000 hours
Table A:- 157000/4 = 39250 units
Now units prduced as under:-
Table A:- 39250 units
Table B:- 20000 units
TableC:- 20000 units