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:

	Basic			Classic			Formal
Sales price	$	38		$	66		$	185
Maximum annual demand (units)		22,000			15,000			32,000
Input requirement per unit
Direct material		0.6 yards			0.2 yards			0.5 yards
Direct labor		0.8 hours			2 hours			7 hours

Costs
Variable costs
Materials	$	22	per yard
Direct labor	$	18	per hour
Factory overhead	$	3	per direct labor-hour
Marketing		10	% of sales price
Annual fixed costs
Manufacturing	$	54,000
Marketing	$	9,500
Administration	$	48,000

Required:

a.	How much operating profit could the company earn if it were able to satisfy the annual demand?
	Operating Profit =

b.

Which of the three product lines makes the most profitable use of the constrained resource, direct labor?

	Classic
	Basic
	Formal

c.

Given the information in the problem so far, what product mix do you recommend?

	Classic and Basic
	Basic and Formal
	Classic and Formal

d.	How much operating profit should your recommended product mix generate? (If needed, round your units to produce number downward to the nearest whole number.)
	Operating Profit =

e.	Suppose that the company could expand its labor capacity by running an extra shift that could provide up to 19,000 more hours. The direct labor cost would increase from $18 to $22 per hour for all hours of direct labor worked during the extra shift. What additional product(s) should Austin manufacture and what additional profit would be expected with the use of the added shift?
	Austin Should Manufacture = Additional Profit Would Be =