San Diego State University Operations And Supply Chain Management Assignment Help - Units

Question - Austin Enterprises makes and sells three types of dress shirts. Management is trying to determine the
most profitable mix. Sales prices, demand, and use of manufacturing inputs follow:

Basic Classic Formal
Sales price $ 31 $ 65 $ 191
Maximum annual demand (units) 20,100 10,100 30,100
Input requirement per unit
Direct material 0.6 yards 0.2 yards 0.5 yards
Direct labor 0.6 hours 1.9 hours 7.1 hours

Costs
Variable costs
Materials $ 19 per yard
Direct labor $ 15 per hour
Factory overhead $ 3 per direct labor-hour
Marketing 10 % of sales price
Annual fixed costs
Manufacturing $ 36,100
Marketing $ 8,010
Administration $ 30,100

The company faces two limits: (1) the volume of each ...Read More type of shirt that it can sell (see maximum
annual demand) and (2) 30,100 direct labor-hours per year caused by the plant layout.
Requirement 1:
Show supporting data in good form.
How much operating profit could the company earn if it were able to satisfy the annual
demand? (Input all amounts as positive values. Round your answers to 2 decimal places. Omit
the "$" sign in your response.)

Total contribution margin $
Total fixed costs

Total operating profit $




Requirement 2:
Which of the three product lines makes the most profitable use of the constrained resource, direct
labor?
(Click to select)FormalsClassicsBasics

Requirement 3:
Given the information in the problem so far, what product mix do you recommend?
(Click to select)Basics and FormalsClassics and BasicsClassics and Formals

Requirement 4:
How much operating profit should your recommended product mix generate? (Input all amounts as
positive values. Round your intermediate calculations to nearest whole number. Round your
answers to 2 decimal places. Omit the "$" sign in your response.)

Total contribution margin $
Total fixed costs

Total operating profit $





Requirement 5:
Suppose that the company could expand its labor capacity by running an extra shift that could provide
up to 10,100 more hours. The direct labor cost would increase from $15 to $20 per hour for all hours
of direct labor used. What additional product(s) should Austin manufacture and what additional profit
would be expected with the use of the added shift? (Round your answers to 2 decimal places.
Omit the "$" sign in your response.)

Austin should manufacture $ (Click to select)BasicsFormalsClassics
Additional profit would be $ ...Read Less

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