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In: Accounting

Rough Stuff makes 2 products: khaki shorts and khaki pants for men. Each product passes through...

Rough Stuff makes 2 products: khaki shorts and khaki pants for men. Each product passes through the cutting machine area, which is the chief constraint during production. Khaki shorts take 15 minutes on the cutting machine and have a contribution margin per pair of shorts of $16. Khaki pants take 24 minutes on the cutting machine and have a contribution margin per pair of pants of $32. If it is assumed that Rough Stuff has 4,740 hours available on the cutting machine to service a minimum demand for each product of 3,200 units, how many of each product should be made?

Khaki Shorts: _______ pairs

Khaki Pants: _______ pairs

Solutions

Expert Solution

Answer:
Total Production Units
Particulars Khaki Shorts Khaki Pants
Minimum Demand 3200 3200
Units produced after meeting minimum demand - 6650
Total Production Units 3200 9850
Working:1
Contribution Per Minute of Chief cutting Machine Area
Particulars Khaki Shorts Khaki Pants
Contribution Per Unit (A) 16 32
Minutes Per Pair (B) 15 24
Contribution Per Minute A/B 1.066666667 1.333333333
Rank Second First
Note: Since the Khaki pants Having more per minute contribution so after meeting Minimum demand the balance resources will be applied to produce Khaki Pants.
Calculation of Hours
Particulars Khaki Shorts Khaki Pants
Minutes Per Pair 15 24
Minimum Demand in Units 3200 3200
Hours Required to Complete Minimum Demand 800 1280
Hours Available 4740 Hours
Hours Required to Complete Minimum Demand 2080 Hours
Balance Hours 2660

Working:

Balance Hours after meeting minimum demand

 2660 Hours
Minutes Per Pair of Khaki Pants 24
Units of Khaki Pants Can be produce in balance Hours 6650

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ekkarill92 answered 1 year ago
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