Question

Trailblazers produced two types of boots: men's and women's. The two types of boots are similar, except the women's boots are more stylish. Both the men's and women's boots are made with the same machine. It takes 15 minutes of machine time to produce one pair of men's boots, whereas it takes 30 minutes of machine time to produce one pair of women's boots. The difference in production time results mainly from the different materials used in construction. The relevant data concerning the two types of boots are as follows:

	Men's	Women's
Sales price (per pair)	$35	$40
Less: Direct Materials	10	13
Direct Labor	4	4
Variable Overhead	8	10
Contribution Margin	$13	$13
Required machine time	1/4 hour	1/2 hour

A. If the amount of machine time available is limited, which boot should be produced first?

B. If the total machine time available is 640 hours per month and the demand for each type of boot is 1,000 pairs per month, how many of each type should be produced to maximize profit? (Round answer to the nearest pair.)

C. What other factors should be considered in this decision, and how would they affect the decision?

Answer 1

	Mens	Womens
Selling price per pair	$                         35.00	$                               40.00
Direct Materials per pair	$                         10.00	$                               13.00
Direct labor per pair	$                           4.00	$                                 4.00
Variable Manufacturing Overhead per pair	$                           8.00	$                               10.00
Contribution Margin per unit	$                         13.00	$                               13.00
Required no. of machine hours	0.25	0.50
Contribution Margin per machine hour	$                         52.00	$                               26.00
Ranking based on machine hours	I	II
Since the Contribution Margin per machine hour of Men's is more, Hence the same should be produced first
	Mens	Womens	Total
Demand per month(in pairs)	1000	1000
Machine Hours required to fulfill demand	0.25	0.50
Total Machine Hours required to fulfill demand	250	500	750
Allocation based on Ranking(Balance allocated to Womens)	250	350	600
Pairs produced based on machine hours allocation	1000	700

Other Factors to consider while making decisions:

Market distribution of products: The entity should also consider that in whcih location the products are sold in the market. If the womens shoes are sold in an area where the women's buyers are more than it might happen that the women's shoes are sold faster then Men's shoes and the machine hours can be shifted to producing Women's shoes.

Transporatation and Delivery constraints: The entity should also consider the transportation of finished products to the respetive retailers. It does not mean the cost of transportation or delivery, it means the ease of transporting shoes to retailers and the delivery time to transport. If the delivery time is less than it is more beneficial for the entity to sell that product in the market.