Grover Corp. manufactures three products produces three products, and is current

Question

Grover Corp. manufactures three products produces three products, and is currently facing a labor shortage. The selling price, costs, and labor requirements of the three products are as follows:

57) Grover Corp. manufactures three products produces three products, and is currently facing a labor shortage. The selling price, costs, and labor requirements of the three products are as follows: Product A Product B Product C Selling price 50.00 $30.00 $40.00 Variable cost per unit $35.00 $10.00 $30.00 Direct labor hours per unit 1,5 2 In what order should Grover Corp prioritize production of its products to maximize profit during the labor shortage? O A, C, B. A,B.C B.A, C ? ?, ?, ?

Explanation / Answer

b. A, B, C.

Contribution margin per labor hour of Product A = ($50 - $35) / 1.5 = $10

Contribution margin per labor hour of Product B = ($30 - $10) / 3 = $6.67

Contribution margin per labor hour of Product C = ($40 - $30) / 2 = $5

The contribution margin per labor hour is $10 for A, $6.67 for B, and $5 for C. Profit will be maximized by prioritizing Product A, then B, then C.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.