Exercise 4-18 Constraints

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Solution Guide / Answer Key:

ACCOUNTING

MT425 / MT 425
Managerial Finance and Accounting
Kaplan University (KU Campus)

James Jiambalvo
Managerial Accounting, 4e
Hoboken, NJ: John Wiley & Sons.

Unit 4: Cost Measurement for Management

Chapter 4 Exercise 4-18 Constraints [LO 6] Dvorak Music produces two durable music stands:

Stand A Stand B
Selling price $90 $80
Less variable costs 30 44
Contribution margin $60 $36

Stand A requires 6 labor hours and stand B requires 3 labor hours. The company has only 350 available labor hours per week. Further, the company can sell all it can produce of either product.

Required
a. Which stand(s) should the company produce?
b. What would be the incremental benefit of obtaining 15 additional labor hours?

FILE: MS WORD