Please help to answer and explain task one based on the case facts provided:
BU467 - Fall 2020 Case Assignment 2 Bebe Suite Limited Bebe Suite Ltd. (BSL) manufactures baby cribs and sells them to retail stores across Canada. BSL manufactures three different models in a single factory in Laval, Quebec. The models are distinguished by the quality of materials used and the sophistication of the design. The cribs vary in price; the Piper model is the most basic and cheapest, the Paxton is a mid-price-point product, and the Berkley is the most expensive model. Quality control is critical for BSL, as it must meet the strict safety requirements for baby cribs in Canada. BSL prides itself on not just meeting but exceeding the minimum requirements. Industry surveys have shown that safety is the most important factor for parents when buying a crib. In addition to product quality, BSL has a strong reputation for excellent customer service and timely delivery. It is January 31, 2020, and you, CPA, work for a consulting firm, Lancaster & Partners LLP. You are meeting with Jenny Wang, the controller of BSL. Jenny asks you to help her with a number of items in preparation for an upcoming board of directors meeting. Jenny informs you that sales have grown to the point where BSL is now operating at capacity and is struggling to meet demand. Jenny provides you with the following statement of income by product line for the year ended December 31, 2019. The average selling prices were $300, $460, and $650 for the Piper, Paxton, and Berkley models, respectively. Piper Paxton Berkley Total Sales $18,987,000 $19,425,800 $20,475,000 $58,887,800 Direct material 5,715,000 6,518,000 6,575,000 18,808,000 Direct labour 3,430,000 4,063,000 4,705,000 12,198,000 Variable MOH 3,112,000 2,667,000 2,240,000 8,019,000 Fixed MOH* 205,800 243,780 282,300 731,880 Fixed selling and 1,139,220 1,165,548 1,228,500 3,533,268 administrative** * Fixed MOH is allocated based on direct labour costs. ** Fixed selling and administrative is allocated based on sales. Performance Management Integrated Problem 3 Problem Task #1 Production capacity is limited by the available machine hours (MH), since there is not enough space to add the equipment necessary to increase production. There are 145,000 MH available in a year. Piper Paxton Berkley MH per unit 0.80 1.20 1.30 The marketing team has provided the following summary of forecasted demand and sales commitments for the upcoming year: Piper Paxton Berkley Forecasted demand 67,000 46,000 38,000 Sales commitments 50,000 40,000 25,000 Determine the number of units of each crib model that should be produced to maximize profitability in the next year while still meeting sales commitments, assuming that no additional capacity is added. BU467 - Fall 2020 Case Assignment 2 Bebe Suite Limited Bebe Suite Ltd. (BSL) manufactures baby cribs and sells them to retail stores across Canada. BSL manufactures three different models in a single factory in Laval, Quebec. The models are distinguished by the quality of materials used and the sophistication of the design. The cribs vary in price; the Piper model is the most basic and cheapest, the Paxton is a mid-price-point product, and the Berkley is the most expensive model. Quality control is critical for BSL, as it must meet the strict safety requirements for baby cribs in Canada. BSL prides itself on not just meeting but exceeding the minimum requirements. Industry surveys have shown that safety is the most important factor for parents when buying a crib. In addition to product quality, BSL has a strong reputation for excellent customer service and timely delivery. It is January 31, 2020, and you, CPA, work for a consulting firm, Lancaster & Partners LLP. You are meeting with Jenny Wang, the controller of BSL. Jenny asks you to help her with a number of items in preparation for an upcoming board of directors meeting. Jenny informs you that sales have grown to the point where BSL is now operating at capacity and is struggling to meet demand. Jenny provides you with the following statement of income by product line for the year ended December 31, 2019. The average selling prices were $300, $460, and $650 for the Piper, Paxton, and Berkley models, respectively. Piper Paxton Berkley Total Sales $18,987,000 $19,425,800 $20,475,000 $58,887,800 Direct material 5,715,000 6,518,000 6,575,000 18,808,000 Direct labour 3,430,000 4,063,000 4,705,000 12,198,000 Variable MOH 3,112,000 2,667,000 2,240,000 8,019,000 Fixed MOH* 205,800 243,780 282,300 731,880 Fixed selling and 1,139,220 1,165,548 1,228,500 3,533,268 administrative** * Fixed MOH is allocated based on direct labour costs. ** Fixed selling and administrative is allocated based on sales. Performance Management Integrated Problem 3 Problem Task #1 Production capacity is limited by the available machine hours (MH), since there is not enough space to add the equipment necessary to increase production. There are 145,000 MH available in a year. Piper Paxton Berkley MH per unit 0.80 1.20 1.30 The marketing team has provided the following summary of forecasted demand and sales commitments for the upcoming year: Piper Paxton Berkley Forecasted demand 67,000 46,000 38,000 Sales commitments 50,000 40,000 25,000 Determine the number of units of each crib model that should be produced to maximize profitability in the next year while still meeting sales commitments, assuming that no additional capacity is added
