Product Mix Choice: Leastan Company manufactures a line of carpeting that includes a commercial carpet and a residential carpet. Two grades of fiber—heavy-duty and regular—are used in manufacturing both types of carpeting. The mix of the two grades of fiber differs in each type of carpeting, with the commercial grade using a greater amount of heavyduty fiber.

Leastan will introduce a new line of carpeting in two months to replace the current line. The present fiber in stock will not be used in the new line. Management wants to exhaust the present stock of regular and heavy-duty fiber during the last month of production.

Data regarding the current line of commercial and residential carpeting are as follows:

Lestan has 42,000 pounds of heavy-duty fiber and 24,000 pounds of regular fiber in stock. All fiber not used in the manufacture of the present types of carpeting during the last month of production can be sold as scrap at $.25 a pound. There are a maximum of 10,500 direct labor-hours available during the month. The labor force can work on either type of carpeting. Sufficient demand exists for the present line of carpeting so that all quantities produced can be sold.

Required:

a. Calculate the number of rolls of commercial carpet and residential carpet Leas- tan Company must manufacture during the last month of production to exhaust completely the heavy-duty and regular fiber still in stock.

b. Can Leastan Company manufacture these quantities of commercial and residential carpeting during the last month of production? Explain your answer.

Transcribed Image Text:

Commercial Residential Selling price per roll Production specifications per roll of carpet: $1,000 $800 Heavy-duty fiber 80 pounds Regular fiber 20 pounds Direct labor-hours 15 hours Standard cost per roll of carpet: Heavy-duty fiber ($3 per lb.) $240 40 pounds 40 pounds 15 hours $120 Regular fiber ($2 per lb.) 40 80 Direct labor ($10 per DLH) 150 150 Variable manufacturing overhead (60% of direct labor cost) Fixed manufacturing overhead (120% of direct labor cost) 90 90 180 180 Total standard cost per roll $700 $620