Question

Dalton Inc. produces and sells three products. Unit data concerning each product is shown below.

		Product
		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

ummeryProduct DProduct EProduct FContribution margin per direct labor hour$                                            24$                                               16$                                    19

Determine which product should be produced.                                                                       Product DProduct EProduct F

Determine the total contribution margin for that product. D,E,F?

Total contribution margin

$

Answer 1

a
	Direct Labor Hours
Product D	2.6	=28.6/11
Product E	7.6	=83.6/11
Product F	3.1	=34.1/11
b
	Product D	Product E	Product F
Selling price	181.00	283.20	233.00
Less: Variable costs
Direct labor costs	28.60	83.60	34.10
Other variable costs	90.00	78.00	140.00
Total Variable costs	118.60	161.60	174.10
Contribution margin per unit	62.40	121.60	58.90
Divide by Direct Labor Hours Per unit	2.6	7.6	3.1
Contribution margin per direct labor hour	24	16	19
c
Product D should be produced
d
Total contribution margin	45600	=1900*24