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Heels Ltd produces two brands of shoe. The Everyday brand sell for 150 per pair after a mark up of 50% on variable costs, it
Heels Ltd produces two brands of shoe. The "Everyday" brand sell for 150 per pair after a mark up of 50% on variable costs, it takes 4 labour hours to produce a pair and it is forecast they will produce and sell 9750 pairs per annum. The "Occasion brand sells for 350 per pair after a mark up of 50% on variable costs and an additional "fashion premium" mark up of 80 per pair. It takes 6 labour hours to produce a pair of Occasion and it is forecast that they will sell 3000 pairs per annum. After 8 months of the year they are asked to produce a one-off batch of a new product, "Hybrids" by year end. The batch will be for 2000 pairs of shoes and they will take 5 hours to make per pair, and total variable cost for a pair of Hybrids will be 30% greater than for a pair of Everyday. Heels Ltd is targeting annual profit of 600,000, has fixed costs of 405,000, and has a maximum of 5,000 labour hours per month available. What is the minimum price they can charge per pair for the Hybrids whilst committing to filling that order in full and meeting the annual profit target
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