Question
Cinderella Incorporated is currently producing three lines of dresses. The data on each dress is as follows: BLUE PINK ORANGE Selling price $80 $56 $70
Cinderella Incorporated is currently producing three lines of dresses. The data on each dress is as follows:
BLUE PINK ORANGE
Selling price $80 $56 $70
Variable expenses
Direct materials 24 15 9
Labour and overhead 24 27 40
48 42 49
Contribution margin $32 $14 $21
Contribution margin ratio 40% 25% 30%
The same material is used in each dress. The material costs are $3 per yard, with a maximum of 5000 yards available each month. Demand for the dresses is very strong with demands for 300 Blue; 1000 Pink and 500 Orange.
Required:
- Can we meet the current demand of all dresses?
- In which order would you accept orders and at what amounts?
- How much would you be willing to pay for extra yardage in order to complete demand 100%?
- Give two other alternatives for the company to meet demand.
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