Santana Rey has found that her line of computer desks and chairs has become very popular and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Desks Chairs Selling price per unit$1,125 $375 Variable costs per unit 500 200 Contribution margin per unit$625 $175 Direct labor hours per unit 5hours 4hoursExpected demand for next quarter 175desks 50chairs Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.ÂRequired:Determine the optimal sales mix and the contribution margin the business will earn at that sales mix. (Input all amounts as positive values. Omit the "$" sign in your response).Please avoid solutions in an image thanx

Answer:- Contribution margin = Contribution margin is basically the difference between sales revenue…

Answered: Santana Rey has found that her line of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8E

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Santana Rey has found that her line of computer desks and chairs has become very popular and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows.

	Desks		Chairs
Selling price per unit	$	1,125		$	375
Variable costs per unit		500			200

Contribution margin per unit	$	625		$	175

Direct labor hours per unit		5	hours		4	hours
Expected demand for next quarter		175	desks		50	chairs

Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.

Required:

Determine the optimal sales mix and the contribution margin the business will earn at that sales mix. (Input all amounts as positive values. Omit the "$" sign in your response).

Please avoid solutions in an image thanx

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