Based on the production costs of the three versions of patio tables, the way that Blosson Inc should rank the products using contribution per labor hour is:
- Product B
- Product A
- Product C
How should the products be ranked?
The product with the largest contribution per labor hour should be ranked highest and this should continue to the project with the lowest contribution per labor hour.
The contribution per labor hour for all products is:
A B C
Sales price $38 $42 $56
Less:
Direct materials (6) (7) (8)
Direct labor (1) (3) (7)
Variable overhead (2) (2) (2)
Contribution $29 $30 $39
Labor hours per unit 0.50 0.50 1
Contribution per labor hour 58 60 39
This shows that Product B should be ranked first and then Product A should come second and then Product C would be third.
Full question is:
Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3.
Find out more on contribution per labor hour at https://brainly.com/question/27773337
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