Ooo-La-La Company Has Met All Production Requirements for the Current

question 92

Essay

Ooo-La-La Company has met all production requirements for the current month and has an opportunity to manufacture additional units with its excess capacity. Unit selling prices and unit costs for three product lines follow.

Variable overhead is applied on the basis of direct labor dollars, whereas fixed overhead is applied on the basis of machine hours. There is sufficient demand for the additional manufacture of all products.
Required:
A. If Ooo-La-La has excess machine capacity and can add more labor as needed (i.e., neither machine capacity nor labor is a constraint), which product is the most attractive to produce?
B. If Ooo-La-La has excess machine capacity but a limited amount of labor time available, which product or products should be manufactured in the excess capacity?

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Definitions:

Disease

A disease is a condition that impairs normal body function, often characterized by specific signs and symptoms, and can be caused by external factors or internal dysfunctions.

Microscope

An optical instrument used for viewing very small objects, such as mineral sections or cells, typically magnified several hundred times.

Suffix

A morpheme added at the end of a word to form a derivative or change its meaning.

Adhesion

The process by which two surfaces are held together by physical or chemical means; also refers to the abnormal sticking together of tissues in the body.