3. Constrained resources EagleEye Company makes two sizes of computer monitors:

Question

3. Constrained resources EagleEye Company makes two sizes of computer monitors: 17-inch and 19-inch. Due to a labor strike, only 880 direct labor hours will be available next week. The information is listed below 17-inch 375 5550 19-inch $550 $330 Selling price per unit Variable costs per unit Direct labor hours per unit Units ordered for next week 10 125 100 The contribution margin per unit of constraine resource is a· Ans: $ per unit of direct labor hour for 17-inch monitor Ans:$ _per unit of direct labor hour for 19-inch monitor b. How many units of 17-inch and 19-inch monitors should EagleEye produce? Ans: units of17-mchmonitor and ts of 19-inch monitor

Explanation / Answer

19-inch should be produced first due to higher contribution per hour.

In order to make 19-inch 100 units we needs 100 x 11 = 1100 hours

but available hours are only 880 hours

no of units of 19-inch can be made = 880 / 11 = 80 units

No units of 17-inch can be made as there is no balance hours

Particulars 17-inch 19-inch Selling Price 375 550 Less: Variable Cost 210 330 Contribution per unit (A) 165 220 No of hour per unit (B) 10 11 Contribution Per Hour 16.5 20 Rank II I

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