AUSTIN ENTERPRISES $ Basic 30 $ 20,000 Classic 64 $ 10,000 Formal 190 30,000 Product information: Sales price Maximum annual demand (units) Input requirement per unit Direct material (yards) Direct labor (hours) 0.5 0.3 2.0 0.6 7.0 0.7 $ $ $ Costs: Variable costs Materials (per yard) Direct labor (per hour) Factory overhead (per direct-labor hour) Marketing (percent of sales price) Annual fixed costs Manufacturing Marketing Administration 20 16 4 10% A A A $ 36,000 8,000 30,000 30,000 Additional Information: Maximum direct labor-hours per year Requiremente: Additional production hours provided by running extra shift Direct labor costs per hour including extra shift 10,000 19 $ AUSTIN ENTERPRISES Requirement a: Basic 600,000 $ Classic 640,000 $ Formal 5,700,000 $ $ Total revenue Less variable manufacturing costs: Direct materials Direct labor Variable overhead Variable marketing Total costs Contribution margin 200,000 $ 224,000 56,000 60,000 540,000 60,000 $ Correct! 60,000 $ 320,000 80,000 64,000 524,000 116,000 $ Correct! $ $ 360,000 3,360,000 840,000 570,000 513,000 570,000 Correct! 746,000 74,000 672,000 Correct! Total contribution margin Total fixed costs Total operating profit $ Requirement b: Basic Classic Formal Total contribution margin Total demand Contribution margin per unit Hours allowed per unit Contribution margin per labor hour Requirement c: Most profitable product per labor hour: (enter name): Units produced to meet demand Labor hours per unit Total labor hours for most profitable product Next most profitable product: (enter name) Remaining available labor hours Labor hours per unit Units produced of next most profitable product Summary: Units produced of most profitable Units produced of second most profitable Total units produced Requirement d: Classic Total Basic 428,000 $ $ Total revenue Less variable manufacturing costs: Direct materials Direct labor Variable overhead Variable marketing Total costs Contribution margin Total fixed costs Total operating profit 143,850 $ 159,992 39,998 42,855 385,956 42,855 $ Correct! 60,000 320,000 80,000 64,000 524,000 116,000 $ Correct! $ $ 158,855 7,400 84,855 Correct! Requirement e: Decision to add shift to product more Basic and/or Formal Basic Classic Formal Contribution margin per unit Additional labor cost at higher rate Hours to produce one unit Contribution per labor hour for extra cost New contribution margin per labor hour Demand (for profitable products only) Present production (from Requirement c) Amount to produce on new shift Contribution margin per unit of new production Additional operating profit (rounded)