Liverpool

ASSIGNMENT (ZCZA6103)

SAIFUL HAFIZ BIN A. RAHMAN

ZP01667

14-62

1. Determine which of Sportway’s option makes the best use of its scarce resource. How many Skateboards & Tackle Boxes should be manufactured? How many Tackle Boxes should be purchased?

a) The best use of its scarce resource.

Analysis of Product

| |Tackle Box |Skateboard |
|Direct Labor Cost |$ 18.75 |$ 7.50 |
|Direct Labor ($15.00 per hour) |$ 15.00 |$ 15.00 |
|Direct Labor Hour per unit |1.25 |0.5 |
|Maximum Production unit |8,000 |20,000 |
|Maximum Labor Hour |10,000 |10,000 |

Capacity constrains max 10,000

Plastic Department could produce 8,000 units of Tackle Box, OR 20,000 units of skateboards.

Calculating manufacturing overhead per unit for Tackle Box

|Allocated Fixed Manufacturing Overhead |$ 50,000 |
|(Divide) Total Labor hours |10,000 |
|Manufacturing Overhead per hour |5 |
|(Plus) Labor Hour per unit |1.25 |
|Manufacturing Overhead per unit