Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Fleet Valley Shoes produces two models: Nx100 ( a shoe aimed at competitive runners) and the Mx100 ( a shoe aimed at fitness buffs). Sales
Fleet Valley Shoes produces two models: Nx100 ( a shoe aimed at competitive runners) and the Mx100 ( a shoe aimed at fitness buffs). Sales and cost for the most recent year are indicated: Nx100 Mx100 Sales (pairs) 20,000 80,000 sales $3,000,000 $8,800,000 Variable cost (700,000) (1,200,000) contribution margin 2,300,000 7,600,000 fixed cost (20,000) (1,500,000) Profit $2,280,000 $6,100,000 assembly time per pair 3 hours 2 hours profit per assembly hour $38.00 $37.50 CM per assembly hour $38.33 $47.50 (a) suppose the company has 200,000 assembly hours available. Further, management believes that at least 4000 pairs of each model must be produced so that the company has a presence in both market segments. how many pairs of each model should be produced in the coming year? (b) Suppose that management decides that at least 6000 pairs of each models must be produced. what is the opportunity cost of this decision versus requiring only 4000 pairs
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started