Liverpool

Pages: 6 (615 words) Published: May 8, 2013
ASSIGNMENT (ZCZA6103)

SAIFUL HAFIZ BIN A. RAHMAN

ZP01667

14-62

1. Determine which of Sportway’s option makes the best use of its scarce resource. How many Skateboards & Tackle Boxes should be manufactured? How many Tackle Boxes should be purchased?

a) The best use of its scarce resource.

Analysis of Product

| |Tackle Box |Skateboard | |Direct Labor Cost |\$ 18.75 |\$ 7.50 | |Direct Labor (\$15.00 per hour) |\$ 15.00 |\$ 15.00 | |Direct Labor Hour per unit |1.25 |0.5 | |Maximum Production unit |8,000 |20,000 | |Maximum Labor Hour |10,000 |10,000 |

Capacity constrains max 10,000

Plastic Department could produce 8,000 units of Tackle Box, OR 20,000 units of skateboards.

Calculating manufacturing overhead per unit for Tackle Box

|Allocated Fixed Manufacturing Overhead |\$ 50,000 | |(Divide) Total Labor hours |10,000 | |Manufacturing Overhead per hour |5 | |(Plus) Labor Hour per unit |1.25 | |Manufacturing Overhead per unit |\$ 6.25 |

Calculating CM per unit manufactured Tackle Box

|Selling Price per Boxes | |\$ 86.00 | |Variable Cost: | | | |Molded Plastic |\$ 8.00 | | |Hinges, Latches, Handle |\$ 9.00 | | |Direct Labor (\$ 15.00 per hour) |\$ 18.75 | | |Manufacturing Overhead per unit |\$ 6.25 | | |Selling and Administrative Cost |\$ 11.00 | | |Total Variable Cost | |\$ 53.00 | |Contribution Margin per unit | |\$ 33.00 | |Fixed Cost | | | |Manufacturing Overhead |\$ 6.25 | | |Selling and Administrative Cost |\$ 6.00 | | |Total Fixed Cost | |\$ 12.25 | |Net Profit per Boxes...