QUESTION 1 (20 marks) Divine Electronics Ltd manufactures a line of headphones. Sales are increasing, and management is concerned that the company may not have sufficient capacity to meet the expected demand for the coming year. The following data are available for planning purposes: I Estimated Demand Next Selling Direct Direct Product Year Price Materials Labour 1 Wire 75,000 $25.00 $5.90 $7.50 2 Wire 125,000 22.50 4.80 6.00 3 Wire 115,000 15.00 4.10 3.00 The following additional information is available: 1 With the strong competition, the company feels that it can't increase its selling prices above those indicated 2 The direct labour rate is $15 per hour; this rate is expected to remain unchanged during the coming year 3 Fixed manufacturing costs total S640,000 per year. Variable manufacturing overhead costs are equal to 20% of direct labour costs. 4 The company's plant has a capacity of 90,000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all three products. 5. The company's current inventory of finished products is nominal and can be ignored D Focus 199 Deus Layout References Mydings Itece Vio Help Share utiles from the Internet can contain vie. Unless you need to ed era stay in Protected View Enable Eoing 2 The direct labour rate is $15 per hour, this rate is expected to remain unchanged during the coming year 3 Fixed manufacturing costs total $610,000 per year. Variable manufacturing overhead costs are equal to 20% of direct labour costs 4 The company's plant has a capacity of 90,000 direct labour hours per year on a single-shift basis. The company's present employees and equipment can produce all three products, 5 The company's current inventory of finished products is nominal and can be ignored 6 All of the other company's no manufacturing costs are fixed REQUIRED: a. How many units of I Wire, 2 Wire and 3 Wite can be produced based on the constraint? (16 marks) b. What is the total contribution margin for the company based on your calculations ma? (4 marks) Forus 10:20 AM BE 16 ** st LI Draw Acct 319 Quiz 3 Fall 2020 Take Home Portion - Protected ViewSaved to this PC- Design Layout References Mailings Review View Help files from the Internet can contain viruses. Unless you need to edit. it's sales to stay in Protected View Enable Editing 4 The company's plant has a capacity of 90,000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all three products. 5 The company's current inventory of finished products is nominal and can be ignored 6 All of the other company's nonmanufacturing costs are fixed REQUIRED: a How many units of 1 Wire, 2 Wire and 3 Wire can be produced based on the constraint? (16 marks) b. What is the total contribution margin for the company based on your calculations in a)? (4 marks) 1 retus
