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Question - Lightwater Limited manufactures product BJK 55 which requires 2 hours of labour time. Labour hours are a scarce resource, due to limited expertise and staff. The company has 120 employees.
Each employee works 8 hours per day.
The factory operates five days per week and 52 weeks annually. The company sells each unit of this product for $260 and the product uses direct material costing $70 per unit. The total factory costs are $180,000 per week.
Required -
a. Calculate the return per factory hour.
b. Calculate the cost per factory hour.
c. Calculate the TPAR.
d. What decision should be made by management.
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