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Q2: GF is a company that manufactures clothes for the fashion industry. The fashion industry is fast moving and consumer demand can change quickly due
Q2: GF is a company that manufactures clothes for the fashion industry. The fashion industry is fast moving and consumer demand can change quickly due to the emergence of new trends. GF manufactures three items of clothing: the 5, the T and the B using the same resources but in different amounts. Budget information per unit is as follows 5 T Selling Price $250 $40 $100 Direct Material ($20 per ma) $100 $10 $30 Direct Labor ($12 per hour) $36 $12 $27 Variable overhead ($3 per machine hour) 59 $3 $6.75 Total Fixed Cost are $300000 per month Included in the original budget constructed at the start of the year, was the sales demand for the month of March as shown below: S T B Demand In March (units) 2000 6000 4000 After the original budget had been constructed, items of clothing 5, T and B have featured in a fashion magazine. As a result of this, a new customer (a fashion retailer), has ordered 1000 units each of 5, T and B for delivery in March. The budgeted demand shown above does not include this order from the new customer. In March there will be limited resources available. Resources will be limited to: Direct Material 14500 m2 Direct Labor 30000 Hours There will be no opening inventory of material, work in progress or finished goods in March Required: (a) Produce a statement that shows the optimal production plan and the resulting profit or loss for March Note: you should assume that the new customer's order must be supplied in full. (b) Explain TWO issues that should be considered before the production plan that you produced in part (2) is implemented. (c) The Board of Directors have now addressed the shortage of key resources at GF to ensure that production will meet demand in April. The production plan for the month of April is shown below: 5 B Production (units) 4000 5000 4000 Required: For April, Calculate the break even sales revenue for the given product mix in the production plan
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