Klean Steppers A group of students at the University of Technology, Jamaica recently won an award in the annual UTech, Ja Business Model Competition for their invention, a white dirt-proof sneaker for children in kindergarten. This invention arose from complaints from parents about having to buy white sneakers for their child children for physical education that soils easily. As a result of the invention, the students decided to start a business, Klean Steppers" to start production. The sneakers have an innovative design and are made of a robust leather and cushioning material, which heightens the resistance to dirt and dust. The following information was discussed at a meeting with the Klean Steppers team. Sales and collections The sneakers are designed for girls and boys. Details of selling prices and projected sales in pairs of sneakers for the four-month period are shown below: Type Girls Boys Selling price Months July August September October $2500 250 290 320 190 $2900 195 230 280 160 It is expected that all sales will be on credit to department stores in Jamaica. It is estimated that 30% of customers will pay within one month while the remaining customers will pay the month following sale. Production Production of sneakers will be based on sales demand. The company requires a closing inventory of 20% of the next month's budgeted sales in pairs of sneakers for girls and boys. There is no opening stock of inventory. Direct Materials and Direct labour (a) The sneakers are made with special leather and specially treated rubber for the sole. The materials and labour required to make each pair of sneakers are as follows: Type of sneakers Girls Boys Leather $370 per meter 0.6m 0.4m Cushion $220 per meter 0.15m Labour $340 per hour 15 minutes 0.10m 12 minutes The company requires a closing inventory of 10% of raw material required for the following month's material needed. There was no opening stock of raw material. The company plans to have a closing inventory of leather of 6.2m and 13m of cushioning material as at the 30 September.