In computing the profit contribution per unit, management did not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which department would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department?
Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A,
B, and C respectively. The cost per hour of overtime is $17 in department A,
$21.50 in department B, and $10 in department C.
