Boyd Wood Company makes a regular and a deluxe grade of wood floors. Regular grade is sold at $9 per square yard, and the deluxe grade is sold at $20 per square yard. The variable cost of making the regular grade is $6 per square yard. It costs an extra $6 per square yard to make the deluxe grade. It takes 15 labor hours to make 100 square yards of the regular grade, and 20 labor hours to make 100 square yards of the deluxe grade. There are 4,000 hours of labor time available for production each week. The maximum weekly sales for the regular and the deluxe model are 25,000 and 5,000 square yards, respectively. Fixed production costs total $450,000 per year. All selling costs are fixed. Requirement What is the optimal production level in number of square yards for each product? Requirement What is the optimal production level in number of square yards for each product? Begin by calculating the contribution margin per direct labor hour for each product grade. (Abbreviations used DLH = Direct labor hour) Regular Deluxe Contribution margin per DLH What is the optimal production level in number of square yards for each product?
Boyd Wood Company makes a regular and a deluxe grade of wood floors. Regular grade is sold at $9 per square yard, and the deluxe grade is sold at $20 per square yard. The variable cost of making the regular grade is $6 per square yard. It costs an extra $6 per square yard to make the deluxe grade. It takes 15 labor hours to make 100 square yards of the regular grade, and 20 labor hours to make 100 square yards of the deluxe grade. There are 4,000 hours of labor time available for production each week. The maximum weekly sales for the regular and the deluxe model are 25,000 and 5,000 square yards, respectively. Fixed production costs total $450,000 per year. All selling costs are fixed. Requirement What is the optimal production level in number of square yards for each product? Requirement What is the optimal production level in number of square yards for each product? Begin by calculating the contribution margin per direct labor hour for each product grade. (Abbreviations used DLH = Direct labor hour) Regular Deluxe Contribution margin per DLH What is the optimal production level in number of square yards for each product?
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter12: Integer Linear Optimization_models
Section: Chapter Questions
Problem 4P: Hawkins Manufacturing Company produces connecting rods for 4- and 6-cylindcr automobile engines...
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