Ozdenses Inc. produces skirts from a special fabric. The fabric is special because of the way it fits many body types. A well-known retail establishment has asked Ozdenses Inc. to produce 3,040 t-shirts from the same fabric. The factory has unused capacity, so Semahat Hanm, the owner of Ozdenses Inc., calculates the cost of making a t-shirt from the fabric. Per unit input consumption and cost data for the skirts and t-shirts are as follows:

Fabric in units

DL hours

Variable MOH costs Fixed MOH costs

Skirts T-Shirts

6.10 3 2 1.30

$8.70 $4 $15 $9.40

Unit contribution margin for skirts is $47. Unit fabric cost is $11, DL per hour is $13.

Q-7)Suppose Ozdenses Inc. can acquire all the fabric that it needs. What is the minimum price the company should charge for the t-shirts?

Q-8)Now suppose that the fabric is in short supply. Every unit of fabric Ozdenses Inc. uses to make t-shirts will reduce the skirts that it can make and sell. What is the minimum price the company should charge for the t-shirts? (Assume fractional number of skirts and t-shirts can be produced and sold.)