Basic |
Classic |
Formal |
|
Sales price |
36 |
70 |
180 |
Less: variable costs |
|||
Direct material cost per unit |
16.2 |
5.4 |
10.8 |
Direct labor cost |
9.8 |
28 |
112 |
Variable overhead |
2.1 |
6 |
24 |
Variable marketing |
3.60 |
7.00 |
18.00 |
Total variable costs |
31.7 |
46.4 |
164.8 |
Contribution margin |
4.30 |
23.60 |
15.20 |
Direct labor hour required |
0.7 |
2 |
8 |
Contribution margin direct labor hour |
6.143 |
11.800 |
1.900 |
18*0.9 = 16.2
18*0.3 =5.4
18*0.6 =10.8
14*0.7 =9.8
14*2 = 28
14*8 = 112
3*0.7 = 2.1
3*2 = 6
3*8 = 24
Part D1
Basic (15000) |
Classic (28000) |
|
Total revenue |
540000 |
1960000 |
Less: variable manufacturing costs: |
||
Direct materials |
243000 |
151200 |
Direct labor |
147000 |
784000 |
Variable overhead |
31500 |
168000 |
Variable marketing |
54000 |
196000 |
Total costs |
475500 |
1299200 |
Contribution margin |
64500 |
660800 |
14000* 2 = 28000
38500-28000 = 10500
10500/0.7 = 15000
Part D 2
Operating profit |
$641300 |
Operating profit = contribution margin – fixed costs = (64500+660800)-(40000+10000+34000) = $641300
Part E
Austin should manufacture |
6200 basics |
Additional profit would be |
$9300 |
austin enterprises makes and sells three types of dress shirts D. 1 D. 2 E. Saved...
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