Bradshaw Industries makes two varieties - Standard and Deluxe - of its one product. The following data are available: a. b. C. Number of units Labor hours per unit d. Standard 250,000 2 Price per unit Variable cost per unit Contribution margin per unit You also know that Bradshaw incurs common fixed costs of $2,100,000. Suppose Bradshaw is considering changing its product mix to sell equal amounts of its Standard and Deluxe products. Total sales would remain at 300,000 units. This change would be implemented over the next five years. Required: $16 $8 $8 Deluxe 50,000 4 $20 $9 $11. Why should Bradshaw consider the common fixed costs as being controllable for this decision? Allocating common fixed costs as per the number of units, calculate Bradshaw's expected profit with the new product mix. Repeat part (b) except use the number of direct labor hours to allocate common fixed costs to the two products. Which of the two estimates, in part (b) or part (c), do you feel is a superior estimate of profit with the new mix? Why?

Bradshaw Industries makes two varieties - Standard and Deluxe - of its one product. The following data are available: You also know that Bradshaw incurs common fixed costs of $2,100,000. Suppose Bradshaw is considering changing its product mix to sell equal amounts of its Standard and Deluxe products. Total sales would remain at 300,000 units. This change would be implemented over the next five years. Required: a. Why should Bradshaw consider the common fixed costs as being controllable for this decision? b. Allocating common fixed costs as per the number of units, calculate Bradshaw's expected profit with the new product mix. c. Repeat part (b) except use the number of direct labor hours to allocate common fixed costs to the two products. d. Which of the two estimates, in part (b) or part (c), do you feel is a superior estimate of profit with the new mix? Why