Trailblazers produces two types of hiking boots: the men\'s boot and the women\'

Question

Trailblazers produces two types of hiking boots: the men's boot and the women's boot. The two types of boots are similar, except that the women's boots are more stylish. Both types are made with the same machines. It takes 15 minutes of machine time to produce one pair of men's boots, whereas it takes 30 minutes of machine time to produce one pair of women's boots. The difference in production time results mainly from the different materials used in construction. The relevant data concerning the two types of boots are as follows:

A. If the total machine time available is 640 hours per month and the demand for each type of boot is 1,500 pairs per month, how many of each type should be produced to maximize profit? (Round your answer to the nearest pair.)

Womens?

Mens?

Men's Women's Sales price (per pair) $36 $41 Less: Direct materials 10 13 Direct labor 4 4 Variable overhead 8 10 Contribution margin $14 $14 Required machine time ¼ hour ½ hour

Explanation / Answer

Trailblazers Contribution Margin Statement for hiking boots per pair Men's Women's Sales Price   $          36 41 Less: Variable Cost Direct Materials $          10 $          13 Direct labor $             4 $             4 Variable overhead $             8 $          10 Total Variable cost $          22 $          27 Contribution Margin (A)-(B) $          14 $          14 Rank 1 1 Required Machine hours per pair 0.25 0.50 Contribution Margin per machine hour (C/D) 56 28 Rank 1 2 Though both the types of hiking boot yields same level of contribution margin per pair, Men's pair yeilds better contribution margin per machine hour. Considering the restricted available machine hours compared to demand, it is better to exhaust the demand for Men's type first and balance machine hours can be used for production of Women's type Workings Men's Women's machine Time(hours) Available Machine Time (hours) 640 Required Machine Hours /pair 0.25 0.5 Demand for the products (in pairs) 1500 1500 Required Machine Time 375 750 1125 Shortage of Machine hours 485 Production based on ranking the prodcut based on highest contribution margin per machine hours Men's Women's machine Time(hours) Available Machine Time (hours) 640 Production of Men's Type (no of pairs) 1500 Machine hours required (0.25 hour per pair) -375 Balance available machine hours 265 No of women's pairs which can be produced (0.50 hour per pair) 132.5 -265 Total Number of pairs to be produced 1500 132.5 Contribution Margin per pair $          14 $          14 Total Contribution margin for recommended product mix $ 21,000 $    1,855

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