Question

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 $18. Khaki pants take 24 minutes on the cutting machine and have a contribution margin per pair of pants of $36. If it is assumed that Rough Stuff has 4,860 hours available on the cutting machine to service a minimum demand for each product of 2,600 units, how many of each product should be made?

Khaki shorts	pairs
Khaki pants	pairs

Answer 1

Answer-----------

Khaki shorts	2600 pairs
Khaki pants	2600 pairs

.Working

The company has enough machine hours to produce maximum demand of the product.

Statement of ranking indicating which product to produced first, second and third
	Product
	Khaki shorts	Khaki pants
Sales price per unit	$           18.00	$               36.00
Variable cost per unit
Contribution margin per unit	$           18.00	$               36.00
Machine hours per unit	0.25	0.40
Contribution margin per machine hour	$           72.00	$               90.00
Ranking	II	I

.

Statement of Optimum mix
Product	Units to be Produced	Machine hours per unit	Machine hours consumed
Khaki shorts	2,600	0.25	650.00
Khaki pants	2,600	0.40	1040.00
Maximum Quantity			1690.00