Smith Dawn Ltd. (SDL) manufactures bicycles and sells them to retail stores across Canada. SDL manufactures three different models. The models are distinguished by the quality of materials used and the sophistication of the design. The bikes vary in price; the Basic model is the most basic and cheapest, the Classic is a mid-price-point product, and the Excel is the most expensive model. Quality control is critical for SDL, The company prides itself on not just meeting but exceeding the minimum requirements. Industry surveys have shown that quality is the most important factor for customers. SDL also has a strong reputation for excellent customer service and timely delivery. It is January 31, 20X1, and you, CPA, work for a consulting firm. The controller of SDL asks you to help her with a number of items in preparation for an upcoming board of directors meeting. She informs you that sales have grown to the point where SDL is now operating at capacity and struggling to meet demand. Issue 1 The controller provides you with the following statement of income by product line for the year ended December 31, 20X0. The average selling prices were $300, $460, and $650 for the Basic, Classic, and Excel models, respectively. Basic Classic Excel 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 1,139,220 1,165,548 1,228,500 3,533,268 and administrativeM * Fixed MOH is allocated based on direct labour costs. * * Fixed selling and administrative is allocated based on sales. 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. Basic Classic Excel 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: Basic Classic Excel Forecasted demand 67,000 46,000 38,000 Sales commitments 50,000 40,000 25,000 Determine the number of units of each bike model that should be produced to maximize profitability in the next year while still meeting sales commitments, assuming that no |AF841 Midterm Winter 2022 Ver A1 1 I P a g e s stud},r source was downloaded by 10000085303?442 from CourseHero.com on 04132023 09:08:49 GMT 05:00 is:l'liwww.coursehero.c0Im"filex'l 379] 383 e'SDLcaseVerA lmidtermdocxf additional capacity is added