Question

Austin Enterprises makes and sells three types of dress shirts Management is trying to determine the most profitable mix. Sales prices, demand, and use of manufacturing out how Basic Classic Formal Sales price $ 32 $ 60 $ Maximum annual demand (units) 160 22.000 12,000 32,000 Input requirement per unit Direct material 0.7 yards 0.8 yards Direct labor 0.9 hours 2 hours 7 hours 0.5 yards Cosi Variable costs Materials Direct labor Factory overhead Annual feed costs Manufacturing Marketing Administration Marketing $ 16 per yard $ 12 per hour $ 4 per direct labor-hour 10 of sales price $38.000 $ 9,000 $32,000 The company faces two limits: (1) the volume of each type of shirt that it can sel (100 maximum annum demand) and (2) 42,000 direct bor hours per year caused by the plant layout Required: #-1. Assuming the company can satisfy the annual demand, calculate the contribution margin for each type of dress shirt using the table below Classic Formal Total revenue Coton margin -2. How much operating profit could the company earn were able to say the demand? Operating 11. Compute the contribution margin for each per the constrained resource, direct labor. Do not round intermediate calculations. Round your final answers to decimal places) Classe Conra mer MacBook Pro

Answer 1

computation of total variabue web (for Bartes Direet matemat (23.0D0 unft x 0.7*+10) factory overhead C22000 x 10.9 $45 computation of total van alle corto for clante le forma $288000 $2688.000 Directla bour 12000 unit x0.9 $17) 479200 $10u00 Marketing C22000 x 433X10%) formal $402600 Ofreet material classic $96000 (12000x 0.5 x 416);(3 2.000K 0.6X6IL) Direct la vocet (12000 x 3X $12) ; (32.000 x 48419) $96000 $896000 factory overheads 512.000 $312.03 Marketing (12000 x 2464); (3200024 * $45 $12000 C12000x460x40%.); (32 000 x $160x10%) $55200D $450560 (-1) computation of con abution margin: Basic clanic. formar Total Revenue $404000 $720000 $5120DOD (22000 x 452) (12000 X$60) (32000 x$ito Total variable costo ($633600) ($552000) ($4505600) Conny butivo Margin $70400 $168000 $614400 (a- computation of operating mofet: Banc classic formal contribution Margin $10400 $168000 #614400 - Manufacturing Freed ($38000) $38000) find marketing costo ($900) ($9000) ($9000) Administration, costo $32 odo) ($32000) ($32000) C8600) $89000 $535400 9/9 Fixed ($38000) COSTO =

Total operating mode - ($8600) + $89000+ $535400 $615800 (6-1) computation of contribution margin:per constrained relocerce, direct labour Baric classic forinal. sales Revenue $704000 $790000 $ 512000D Varialule costs: (5504000) Direet labour ($504000) $504000) (42000 x $12) 642000 x $12) (42000 x $123 $200000 $216000 $4616000 1. Direct material (4246400) ($96000) ($409600) factory overheads ($99900) ($96500) ($896000) Marketing ($ 70400) U$ 72000) ($512000) Con tobution ($196000) $48000) $ 2198 400 Margin -->> Option (c) formal has made most profitame use of the constraint resource, direet labour. ces from the calculations dome so far, the recommended product mix would be Classic and formal option des 10/10 =

( $231600) C$288000) du computation of conto bution margin tor Barse and claule Basic $12000D Total Revenue $-04000 - Varaule manufacturing costo Direct material Direct la vocer classic C$ 965DO) ($246400) C$96 ODD) C$-19200) Factory Overheads $48000D oliy oovo $563200 $240DOD Co Total costo contribution margin in $140800 (d->> The recommended produet mix of classe and formal would generate an operating mofit of $89000 + $ 535400' = +624400. 11/11 =