Acc102 Principles of Managerial Accounting: Final Project - Portable Enterprises

Acc102 Principles of Managerial Accounting
Final Project
Portable Enterprises produces two lines of mobile homes: double-wide and single-wide. Unit cost and revenue data pertaining to each product are shown below:
Double-wide Single-wide
Selling price $70,000 $40,000
Total Variable costs 45,000 20,000
Each double-wide home requires 350 different labor hours and 125 machine hours. Each single-wide home requires 175 direct labor hours and 150 machine hours. Demand for each line of homes far exceeds the company's total production capacity.
Labor Hours Machine Hours
Double-wide home 350 125
Single-wide home 175 150
(a) If Portable's production capacity is constrained by limited direct labor hours, which line of homes should it produce?
(b) If Portable's total production capacity is constrained by machine hours, which line of homes should it produce?
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