
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:1. |
Qee-La-La Company has met all production requirements for the current month and has an
opportunity to manufacture additional units with its excess capacity. Unit selling prices and unit costs
for three product lines follow.
TTT
Plain
Regular
$90
Super
$100
Selling price
Direct material
$75
19
23
20
19
14
29
Direct labor (at $25 per hour)
Variable overhead
15
15
13
23
Fixed overhead
15
Variable overhead is applied on the basis of direct labor dollars, whereas fixed overhead is applied
on the basis of machine hours. There is sufficient demand for the additional manufacture of all
products.
Required:
A. If Q09-La-La has excess machine capacity and can add more labor as needed (i.e., neither
machine capacity nor labor is a constraint), which product is the most attractive to produce?
B. If Q0g-La-La has excess machine capacity but a limited amount of labor time available, which
product or products should be manufactured in the excess capacity?
O553
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