Joseph Hutton Enterprises Has Met All Production Requirements for the Current

question 136

Essay

Joseph Hutton Enterprises has met all production requirements for the current month and has an opportunity to produce additional units of product with its excess capacity. Unit selling prices and costs for three models of one of its product lines are as follows:
$$\begin{array} { l r r r } & \text { No Frills } & \text { Stardard Options } & \text { Super } \\\text { Selling price } & \$ 35.00 & \$ 45.00 & \$ 65.00 \\\text { Direct materials } & 10.00 & 12.00 & 14.00 \\\text { Direct labor } ( \$ 15 \mathrm { Mr } ) & 7.50& 12.00 & 21.00 \\\text { Variable Overhead } & 4.00 & 6.40 & 11.20 \\\text { Fixed Overhead } & 3.00 & 5.00 & 5.00\end{array}$$
Variable overhead is charged to products on the basis of direct labor dollars, and fixed overhead is charged to products on the basis of machine hours.
Required:
(1) If Joseph Hutton Enterprises has excess machine capacity and can add more labor as needed (neither machine capacity nor labor is a constraint), the excess production capacity should be devoted to producing which product or products?
(2) If Joseph Hutton Enterprises has excess machine capacity but a limited amount of labor time, the production capacity should be devoted to producing which product or products?

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Definitions:

Core Competencies

The unique strengths and capabilities that allow an organization to achieve competitive advantage in its industry.

Business Knowledge

Understanding and insight related to the operational, financial, and strategic aspects of running a business.

Job Security

The probability that an individual will retain their job without the risk of becoming unemployed.

Succession Plans

Preparatory steps taken by an organization to ensure employees are recruited, developed, and maintained to fill each key role within the company over time.