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Due to the world-wide pandemic (COVID19), Dynamadics has been struggling to secure a reliable source for the high-quality leather required to produce its designer
Due to the world-wide pandemic (COVID19), Dynamadics has been struggling to secure a reliable source for the high-quality leather required to produce its designer women's shoes. Additionally, in some regional operations, employees have been unable to work due to illness or quarantine protocols. Thankfully, no employees have become critically ill as a result of COVID19. The selling price, variable costs and contribution margin for each of three specific types of shoes and additional operational information is presented below: Selling Price Less: Variable costs Direct materials Direct labour Other variable overhead Total variable costs Contribution margin Product Runway Princess Comfort $152.00 $215.00 $210.00 28.00 111.00 83.00 16.20 16.20 16.20 76.20 37.00 70.50 120.40 164.20 169.70 $31.60 $50.80 $40.30 The high quality leather that is in short supply is used to produce all three types of shoes. Dynamadics has only 12,000 kilograms of the leather on hand and is unable to secure any additional leather for a number of weeks. Direct labour costs are $26.00 per hour. Leather costs $4 per kilogram
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