Davis, Managerial Accounting, 2e MANAGERIAL ACC (Acctg CALCULATOR MESSAGE MY INSIRUCIOR SIANDARD VIEN PRINTER VERSION Chad Davis, vice president for operations at C&C Sports, is considering different strategies for managing the company's inventory. Earlier in the year, the company implemented a more systematic production schedule so that at the end of each month Finished Goods Inventory is 25% of the next month's anticipated sales. That strategy freed a lot of inventory space and improved the company's cash flow. However, Chad noticed that because of the seasonal nature of the purchases of all of the products, especially award jackets, the need for direct labor hours fluctuated widely from one month to the next. Even though Chad is able to hire workers as needed, he is concerned that eventually he won't be able to find skilled workers unless they are promised a more consistent schedule. For C&C Sports, labor and sewing machines are constrained resources. The company can produce as many of their products as they have people to make them Chad gathered the followlng unlt sales and cost Information about each product. Sales price Direct materials Direct labor Variable overhead Fixed overhead Total cost Gross profit Direct labor hours Pants Jerseys Jackets $12.00 $14.80 $125.00 4.47$.85 $44.72 14.40 7.92 10.08 $9.87$11.1777.12 $3.63 $47.88 1.50 2.40 1.32 1.68 1.92 1.05 1.35 $2.13 25 20 C&C SPORTS Sales Forecast for 2014 Jan Feb _Mar Apr _May June July Aug Sep _Oct Nov _Dec Annual Baseball pants 38,000 20,000 12,000 12,000 12,000 16,000 8,000 6,000 6,000 10,000 20,000 40,000 200,000 Baseball jerseys 12,000 9,000 5,000 4,000 6,000 3,000 2,000 2,000 2,000 4,000 6,000 15,000 70,000 0 1,000 5,000 3,000 18,000 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Annual Award jackets 0 0 1,000 5,000 3,000 0 C&C SPORTS 4th Quarter Direct Labor Budget-All Products October November December 4th Quarter Baseball pants (Exhibit 5-12) Baseball jerseys Award iackets 3,125 900 3.000 6,250 1,650 3.000 9,875 2,850 3.000 19,250 5,400 9.000