Aqua Aztec (AA) is a manufacturer of stand-up paddleboards (SUPS) and produces four different models: Beast,...

  

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Aqua Aztec (AA) is a manufacturer of stand-up paddleboards (SUPS) and produces four different models: Beast, Monster, Vapor and Coral. In addition to the four models of SUPS, AA also produces a maintenance kit for the SUPS. Demand for the SUPS is increasing and management has requested your help in determining the best sales and production mix for the next year. The company has provided you with the following data: Product Beast Monster Vapor Coral Maintenance Kit a. Demand next year 4,800 5,900 6,200 b. 6,850 75,000 Selling Price per unit $750.00 $660.00 $620.00 $550.00 $150.00 Direct materials $525.00 $520.00 $425.00 $415.00 $62.00 Direct labour $84.00 $60.00 $86.40 The following additional information is available: The company's plant has a capacity of 200,000 direct labour hours per year on a single-shift basis. Due to the tight labour market, this cannot be increased. The company's current employees and equipment can produce all five products. $72.00 $43.20 All of the company's nonmanufacturing costs are fixed. The company's present inventory of finished products are negligible and can be ignored. REQUIRED: The direct labour rate is $24.00 per hour; this rate is expected to remain unchanged during the coming year. Fixed costs total $2,580,000 per year. Variable overhead costs are $16.00 per direct labour-hour. Determine whether Aqua Aztec has sufficient labour hours to satisfy demand for next year. Show all workings and explain your answer. Determine the production plan for the company that maximises its income. Show all workings and explain your answer. Aqua Aztec (AA) is a manufacturer of stand-up paddleboards (SUPS) and produces four different models: Beast, Monster, Vapor and Coral. In addition to the four models of SUPS, AA also produces a maintenance kit for the SUPS. Demand for the SUPS is increasing and management has requested your help in determining the best sales and production mix for the next year. The company has provided you with the following data: Product Beast Monster Vapor Coral Maintenance Kit a. Demand next year 4,800 5,900 6,200 b. 6,850 75,000 Selling Price per unit $750.00 $660.00 $620.00 $550.00 $150.00 Direct materials $525.00 $520.00 $425.00 $415.00 $62.00 Direct labour $84.00 $60.00 $86.40 The following additional information is available: The company's plant has a capacity of 200,000 direct labour hours per year on a single-shift basis. Due to the tight labour market, this cannot be increased. The company's current employees and equipment can produce all five products. $72.00 $43.20 All of the company's nonmanufacturing costs are fixed. The company's present inventory of finished products are negligible and can be ignored. REQUIRED: The direct labour rate is $24.00 per hour; this rate is expected to remain unchanged during the coming year. Fixed costs total $2,580,000 per year. Variable overhead costs are $16.00 per direct labour-hour. Determine whether Aqua Aztec has sufficient labour hours to satisfy demand for next year. Show all workings and explain your answer. Determine the production plan for the company that maximises its income. Show all workings and explain your answer.

Answer rating: 100% (QA)

a To determine whether Aqua Aztec has sufficient labor hours to meet next years demand we must calculate the total labor hours needed for each product and compare them to the available labor hours Fir... View the full answer