Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the...
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Accounting
Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the three products appear below:
Product
F
G
H
Selling price
$
60
$
40
$
70
Variable costs
$
25
$
15
$
30
Fixed costs
$
50
$
5
$
47
Milling machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct labor hours.
Demand for the three products exceeds the company's productive capacity. The milling machine is the constraint, with only 2,700 minutes of milling machine time available this week.
Required:
a. Given the milling machine constraint, what should the company focus on to make the production decision?
b. Based on your answer to part (a), calculate that amount for each product.
c. Which product should be emphasized?
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