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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
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 inputs follow Sales price Maximum annual demand (units) Input requirement per unit $ 38 18,000 5 70 11,000 $ 200 28.000 Direct material Direct labor 0.7 yards 0 9 hours 0.5 yards0.8 yards 8 hours 2 hours Variable costs Materials Direct labor Factory overhead Marketing s 18 per yard 5 14 per hour S 5 per direct labor-hour 10%o, sales price Annual fixed costs Manufacturing Marketing Administration $50.000 $ 7,500 $44,000 The company faces two limits: (1) the volume of each type of shit that it can sell see maximum annual demand) and (2)35,500 direct labor-hours per year caused by the plant layout Required: a-1. Assuming the company can satisty the annual demand calculate the contibution margin for each type of dress shirt using the table below Total revenue Total variable costs
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