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Ralph's Artistic Artwork manufactures three different products lines, Impressionistic, Modern and Caricature. The following per unit data apply: Impressionism Modern Cari cature Selling price $160
Ralph's Artistic Artwork manufactures three different products lines, Impressionistic, Modern and Caricature. The following per unit data apply: Impressionism Modern Cari cature Selling price $160 Cost of paint and frame S180 $60 S35 $10 Variable labor $20 per hour Variable overhead a S10 per SF Allocated Rent Market Demand SF Square foot Note: Each of the following scenarios is independent. S30 S20 $20 100 200 200 1. The Company has only 400 square feet available. a. How many units of each model should be made? b. What is the total contribution marg in under the optimal product mix? 2. The Company has 500 labor hours available. a. How many units of each model should be made? b. What is the total contribution margin under the optimal product mix? 3. The Company has unlimited resources. a. In what products' order should the Company's S100,000 marketing budget be spent? 4. Assume that Ralph has enough resources to manufacture the 3 products above, but nothing else. He can contract with Disney World to produce the Caricature product line fora purchase price of $175 per unit (Ralph would pay Disney for the paintings but the Ralph would sell to the final customer). Ralph would produce another line of art with the resources -Beach Scenes. Ralph is hoping the Beach Scene line would sell well on the West Coast of Florida. He expects to sell 250 paintings for a contribution margin of S75 per picture. Ralph would allocate $40 in rent to the new product line. Should Ralph outsource the Caricature product line and produce the Beach Scenes? 5. What are some non-quantitative factors that should be considered by the company to develop a product mix strategy
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