Reference no: EM132752157

Decker Products manufactures standard (S) and deluxe (D) wooden swing sets. Selected data related to each product is as follows:

Sales price per unit               $900 (S)         $2,000 (D)

Direct materials per unit        100 (S)              500 (D)

Direct labor per unit               300 (S)              700 (D)

Variable overhead per unit       50 (S)               100 (D)

Machine hours per unit              4 (S)                  8 (D)

Most of the manufacturing process for the sets is done on machines. There is a maximum of 10,000 machine hours available each year.

Problem 1: What is the contribution margin per unit of limited resource for each type of set?

a. Standard: $125.00 Deluxe: $100.00
b. Standard: $225.00 Deluxe: $250.00
c. Standard: $450.00 Deluxe: $700.00
d. Standard: $112.50 Deluxe: $ 87.50

Problem 2: If demand were strong for both sets and the company could sell an unlimited number of either style, how many of which kind(s) of wooden swing set(s) should be produced in order to maximize profits?

a. 2,500 standard sets
b. 1,250 deluxe sets
c. 500 standard sets and 1,000 deluxe sets
d. 2,000 standard sets and 250 deluxe sets

Problem 3: If demand were not strong for both sets and the company could only sell a maximum of 2,000 standards sets plus 2,000 deluxe sets, how many of which kind(s) of wooden swing set(s) should be produced in order to maximize profits?

a. 2,000 standard sets
b. 1,250 deluxe sets
c. 500 standard sets and 1,000 deluxe sets
d. 2,000 standard sets and 250 deluxe sets