In: Accounting
Dalton Inc. produces and sells three products. Unit data concerning each product is shown below.
Product |
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D |
E |
F |
||||
Selling price | $181.00 | $283.20 | $233.00 | |||
Direct labor costs | 28.60 | 83.60 | 34.10 | |||
Other variable costs | 90.00 | 78.00 | 140.00 |
The company has 1,900 hours of labor available to build inventory in anticipation of the company’s peak season. Management is trying to decide which product should be produced. The direct labor hourly rate is $11.
Product | Direct Labor Cost Per unit | Direct Labor Hours Per unit | |
a | b | c=b/$11 | |
Peoduct D | $ 28.60 | 2.60 | hours per unit |
Peoduct E | $ 83.60 | 7.60 | hours per unit |
Peoduct F | $ 34.10 | 3.10 | hours per unit |
Determine the contribution margin per direct labor hour.
(Round intermediate calculation and final answers to 2
decimal places, e.g. 52.75.)
Product D |
Product E |
Product F |
||||
Contribution margin per direct labor hour |
$ |
$ |
$ |
Product | Selling price per unit | Direct Labor Cost Per unit | Other variable cost | Contribution margin per unit | Direct Labor Hours per unit | Contribution margin per labor hour |
a | b | c | d | e=b-c-d | f | fg=f/e |
Peoduct D | 181 | $ 28.60 | 90 | $ 62.40 | 2.6 | $ 24.00 |
Peoduct E | 283.2 | $ 83.60 | 78 | $ 121.60 | 7.6 | $ 16.00 |
Peoduct F | 233 | $ 34.10 | 140 | $ 58.90 | 3.1 | $ 19.00 |
Summery | |||
Product D | Product E | Product F | |
Contribution margin per direct labor hour | $ 24 | $ 16 | $ 19 |