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
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 Formal 165 37,000 860 17,000 F 0.6 yards 0.2 yarde 0.6 yards 2 hours 7 hour Maximum annual demand (anita) 27,000 Input requirement per uni Direct material Direct labor Variable coeta Materials Direct labor Tactory overhead Marketing Annual fianco Kanutanturing Marketing Administration 21 per yard $ 15 per hour 3 per direct labor-hour 10% of sales price. $43,000 $11,500 $37,000 The company faces two limits: (1) the volume of each type of shirt that it can sell (see maximum annual demand) and (2) 48.000 direct labor hours per year caused by the plant layout Required: a-1. Assuming the company can satisfy the annual demand, calculate the contribution margin for each type of dress shirt using the table below a-2. How much operating profit could the company earn if it were able to satisfy the annual demand? b-1. Compute the contribution margin for each shirt per the constrained resource, direct labor b-2. Which of the three product Ines makes the most profitable use of the constrained resource, direct labor? c. Given the information in the problem so far, what product mix do you recommend? d-1 Calculate the contribution margin for each type of dress shirt using the table below d-2. How much operating profit should your recommended product mix generate? 1. Suppose that the complex could canandsabor capacity by running an extra shift that could provide up to 13.500 more hours. The
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started