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please help in this hw ABC produce two units, PANTS and T SHIRT.37for which the following information is available: Costs per unit PANTS T SHIRT.37
please help in this hw
ABC produce two units, PANTS and T SHIRT.37for which the following information is available: Costs per unit PANTS T SHIRT.37 Direct materials $ 450 $ 550 Direct labor 600 750 Variable overhead 750 900 Fixed overhead 600 750 Total cost per unit $2,400 $2,950 Price $3,000 $3,900 Units sold 400 200 The average wage rate is $20 per hour. The plant has a capacity of 21,000 direct labor hours, but current production uses only 19,500 direct labor hours. ANSWER THESE QUESTIONS: 1. A new customer has offered to buy 40 units of T SHIRT37 if the price is lowered to $3,000 per unit. How many direct labor hours are required to produce 40 units of Tshirts37? How much will the profit increase or decrease) if ABC accepts this proposal? All other prices will remain the same. 2. Suppose that the customer has instead offered to buy 60 units of T SHIRT37 at $3,000 per unit. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to meet the extra demand. 3. Answer the question in requirement (2), assuming instead that the plant can work overtime. Direct labor costs for the overtime production increase to $30 per hour, i.e., variable overhead cost for overtime production are 50% more than for normal productionStep by Step Solution
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