You can see the picture better if you open it in a new tab. Thank you! Chad Davi
ID: 2464523 • Letter: Y
Question
You can see the picture better if you open it in a new tab.
Thank you!
Chad Davis, vice president for operations at C&C; Sports, is considering different strategies for managing the company's inventory. Earlier in the year, the company implemented a more systematic production schedule so that at the end of each month Finished Goods Inventory is 25% of the next month's anticipated sales. That strategy freed a lot of inventory space and improved the company's cash flow. However, Chad noticed that because of the seasonal nature of the purchases of all of the products, especially award jackets, the need for direct labor hours fluctuated v/idely from one month to the next. Even theugh Chad is able to hire workers as needed, he is concerned that eventually he won't be able to find skilled workers unless they are promised a more consistent schedule. For CSC Sports, labor and sewing machines are constrained resources. The company can produce as many of their products as they have people to make them. Chad gathered the following unit sales and cost information about each product. Claire Elliot, vice president for finance and administration, reminded him that a commission of 5% of the sales price and shipping costs of $0.40 per item should also be considered when analyzing different strategies. Calculate the contribution margin per unit for each product. (Round answers to 2 decimal places, e.g. 52.75.) Calculate the contribution margin per direct labor hour for each product. (Round answers to 2 decimal places, e.g. 52.75.) If the sales mix continues as budgeted in 2014-200,000 pants, 70,000 jerseys, and 18,000 jackets- how many direct labor hours will be needed to produce these units? If C&C; Sports chose to spread out production evenly throughout the year, how many direct labor hours would be required each week, assuming the company operates all 52 weeks per year? How many employees would be needed if operations ran two 8-hour shifts per day, 5 days per week? (Round answer to nearest whole numbers, e.g. 15.) How many sewing machines would be needed if operations ran two 8-hour shifts per day, 5 days per week? (Round answer to nearest whole numbers, e.g. 15.)Explanation / Answer
(1) Contribution margin (CM) = Sales Price - Total variable cost
= Sales price - (Direct material + Direct labor + Variable overhead)
Pants: $(12 - 4.47 - 2.4 - 1.32) = $3.81
Jersey: $(14.8 - 6.85 - 1.92 - 1.05) = $4.98
Jacket: $(125 - 44.72 - 14.40 - 7.92) = $57.96
(2) CM per labor hour:
Pants: $3.81 / 0.25 = $15.24
Jersey: $4.98 / 0.2 = $24.9
Jackets: $57.96 / 1.5 = $38.64
(3) Direct labor hours needed:
Pants: 200,000 x 0.25 = 50,000
Jersey: 70,000 x 0.2 = 14,000
Jacket: 18,000 x 1.5 = 27,000
Total DLH = 50,000 + 14,000 + 27,000 = 91,000
(4) It's assumed that production will equal the projected sales for all products.
Total hours per week = 91,000 / 52 = 1,750
NOTE: First 4 sub-questions are answered.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.