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:

Stoics

Adherents of Stoicism, a school of philosophy that emphasizes resilience, ethical living, and the belief that virtue is sufficient for happiness.

Indifferent

Showing no particular interest or concern; apathetic or uninterested.

Ayn Rand

A Russian-American novelist and philosopher known for her philosophy of Objectivism and her novels advocating individualism and capitalism.

Theory

A logical explanation or framework for understanding how various aspects of the world relate to each other.