Homework Answers
| Q1 | Ans is b $34,800 | ||||
| Production Schedule Pack500 | |||||
| May | June | July | August | ||
| Sales | 20000 | 32000 | 39000 | 46000 | |
| Add: Ending Inventory (40% of next month sales) | 12800 | 15600 | 18400 | ||
| Stock units required | 32800 | 47600 | 57400 | ||
| Less: Beginning inventory( 40% of current month sales)except May 1 | -9000 | -12800 | -15600 | ||
| Production units Required | 23800 | 34800 | 41800 | ||
| Explanation: Please refer to above calculation | |||||
| Q2 | Since Direct labou hours is constraint here, first we will calculate contribution margin per labor hour | ||||
| Standard | Deluxe | ||||
| Contribution margin per package (a) | $40 | $120 | |||
| Direct labor hours per package (b) | 2 | 3 | |||
| Contribution margin per DLH (a) ÷ (b) | $ 20 | $ 40 | |||
| Since Deluxe has higher margin first we will utilise maximum available hours to Deluxe service | |||||
| Deluxe | |||||
| 800 x 3 DLH = | 2400 DLH | ||||
| Balance to Standard | 1200 DLH | ||||
| Contribution earned | |||||
| Deluxe (2400 DLH x $40) = | $96,000 | ||||
| Standard (1200 DLH x $20) = | $24,000 | ||||
| Total Contribution Margin | $120,000 | Ans is b | |||
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