Answered: Determining the Optimal Product Mix…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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Determining the Optimal Product Mix with One Constrained Resource

Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $11 and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 6 minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time.

Assume that there are no other constraints.

Required:

If required, round your answers to the nearest whole number. If an amount is zero, enter "0".

1. What is the contribution margin per hour of machine time for each type of team shirts?

	Contribution Margin
Homerun	$fill in the blank 1
Goalpost	$fill in the blank 2

2. What is the optimal mix of team shirts?

	Optimal Mix
Homerun	fill in the blank 3 units
Goalpost	fill in the blank 4 units

3. What is the total contribution margin earned for the optimal mix?
$fill in the blank 5

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