Short-Term Product-Mix Decision DVD Production Company produces two basic types of video games, Flash and Clash. Pertine data for DVD Production Company follow: Flash $ 320 Clash $ 190 Sales price Costs Direct materials Direct labor (@ $25/hr.) Variable factory overhead* Fixed factory overhead* Marketing costs (all fixed) Total costs Operating profit 65 100 65 35 25 $ 290 $ 30 35 50 50 25 20 $ 180 $ 10 *Based on direct labor hours: 4 direct labor hours (DLHs) per unit of Flash and 2 DLHs per unit of Clash. The DVD game craze is at its height so that either Flash or Clash alone can be sold to keep the plant operating at full capacity. However, labor capacity in the plant is insufficient to meet the combined demand for both games. Flash and Clash are processed through the same production departments Required: 2a. Calculate the contribution margin per labor hour for both Flash and Clash. (Round your answers to 2 decimal places.) Required: 2a. Calculate the contribution margin per labor hour for both Flash and Clash. (Round your answers to 2 decimal places.) Flash Clash Contribution margin per labor hour 2b. Which of the two products should be produced? O Flash O Clash Special-Order Pricing Barry's Bar-B-Que is a popular lunch-time spot. Barry is conscientious about the quality of his meals, and he has a regular crowd of 600 patrons for his $6.10 lunch. His variable cost for each meal is about $2.30, and he figures his fixed costs, on a daily basis, are about $1,500. From time to time, bus-tour groups with 50 patrons stop by. He has welcomed them because he has capacity to seat 700 diners in the average lunch period, and his cooking and wait staff can easily handle the additional load. The tour operator generally pays for the entire group on a single check to save the wait staff and cashier the additional time. Due to competitive conditions in the tour business, the operator is now asking Barry to lower the price to $3.80 per meal for each of the 50 bus-tour members. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Required: 1-a. What is the incremental profit (loss) per bus-tour meal? 1-b. Should Barry accept the bus-tour offer? 2-a. What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $3.60 per meal? 2-b. Is the offer financially attractive? Required: 1-a. What is the incremental profit (loss) per bus-tour meal? 1-b. Should Barry accept the bus-tour offer? 2-a. What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $3.60 per meal? 2-b. Is the offer financially attractive? Complete this question by entering your answers in the tabs below. Show less A Req 1A Req 1B Reg 2A Req 2B What is the incremental profit (loss) per bus-tour meal? Incremental profit (loss) per tour-bus meal Should Barry accept the bus-tour offer? OYes Ono What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus ..................................................................... Incremental profit (loss) per tour-bus meal Is the offer financially attractive? OYes ON
