Determining the optimal Product Mix with One Constrained Resource Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $4 and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 6 minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time. Assume that there are no other constraints. Required: If required, round your answers to the nearest whole number. If an amount is zero, enter "0". 1. What is the contribution margin per hour of machine time for each type of team shirts? Contribution Margin Homerun 50 X Goalpost 15 x $ 2. What is the optimal mix of team shirts? Optimal Mix Homerun units Goalpost units 3. What is the total contribution margin earned for the optimal mix? $ Feedback Structuring a Special-Order Problem The Millenium Company has been approached by a new customer with an offer to purchase 10,000 units of its model F80 at a price of $4.00 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Millenium normally produces 75,000 units of F80 per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost information for the normal level of activity is as follows: Direct materials Direct labor $1.75 2.50 Variable overhead 1.50 Fixed overhead 3.25 Total $9.00 Fixed overhead will not be affected by whether or not the special order is accepted. Required: 1. Should the company accept or reject the special order? Reject 2. By how much will operating income increase or decrease if the order is accepted? Decrease by $ 18,500 X Feedback Check My Work Determining the Optimal Product Mix with One Constrained Resource and a Sales Constraint Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $5 and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 5 minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time. Assume that a maximum of 50,860 units of each team shirts can be sold. Required: If required, round your answers to the nearest whole number. 1. What is the contribution margin per hour of machine time for each type of team shirts? Contribution Margin Homerun 50 Goalpost 30 2. What is the optimal mix of team shirts? Optimal Mix Homerun units Goalpost units 3. What is the total contribution margin earned for the optimal mix? $ Feedback AL-LLA
