Grissom Products Installs Standard and Deluxe Storage Sheds Most of the Installation Process of the Sheds Is Done

question 49

Essay

Grissom Products installs standard and deluxe storage sheds.Selected data related to each product is as follows:
$\begin{array}{lrr}&\underline{\text {Standard}}&\underline{\text {Deluxe}}\\\text { Sales price per unit } & \$ 2000 & \$ 4000 \\\text { Direct materials per unit } & 350 & 600 \\\text { Direct labour per unit } & 250 & 350 \\\text { Variable overhead per unit } & 100 & 200 \\\text { Direct labour hours per unit } & 4 & 6\end{array}$
Most of the installation process of the sheds is done using direct labour.There are a maximum of 24 000 direct labour hours available each year.
Required:
A. If there is unlimited demand for both products, how many of each type of shed should be installed in order to maximise profits?

B. If the company believes that there is sufficient demand for up to 4000 standard and 2500 deluxe sheds each year, how many of each type should be installed in order to maximise profits?

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Definitions:

Compensating Differentials

Wage differentials that arise to compensate workers for the desirability or undesirable aspects of their jobs, such as risk or location.

Property Income

Income received by individuals or entities through ownership of property. This could include rental income, dividends from investments, or interest on savings.

Smooth Functioning

Describes a situation where processes operate without interruption, often related to the seamless operation of systems or organizations.

Federal Minimum Wage

The lowest legal hourly pay for many workers in the United States, set by federal law.