## Question

# Based in Vancouver, BC, Glide Ltd. is a manufacturer of snowboards for the Canadian market. It has two models: the FreeRide and the FreeStyle. Glide

Based in Vancouver, BC, Glide Ltd. is a manufacturer of snowboards for the Canadian market. It has two models: the "FreeRide" and the "FreeStyle". Glide is attempting to determine how many units should be manufactured of each model for the upcoming winter season. Glide can sell each FreeRide model for $500 and each FreeStyle model for $350 wholesale.The variable production cost for FreeRide is $325 and for FreeStyle it is $200. The production volume for FreeRide cannot exceed 2,000 units and FreeStyle cannot exceed 1,000 units. It takes 16 hours to manufacture each FreeRide board and 10 hours to manufacture each FreeStyle board. Glide has factory capacity of 20,000 hours and Fixed OH of $100,000.

1.As the firm's Management Accountant, formulate the full linear program decision-model that will help them understand the optimal Contribution Margin for the snowboards next year.

2.A competitor has informed you that due to the economic downturn they have available capacity hours in the factory that they wish to rent out by the hour as an attempt to recover their fixed costs. Using the data from Exhibit 1, what is the total maximum dollars Glide would be willing to pay for 1,500 additional hours of capacity and hot harm its optimal Contribution Margin?

3.Using the data from Exhibit 1, if the Margin for FreeStyle was actually $110/unit rather than $150/unit, what results would remain unchanged? What results would change in Exhibit 1, and by how much?

Exhibit 1 Microsoft Excel 12.0 Answer Report Target Cell (Max) Cell Name $D$12 Contribution Margin Total Adjustable Cells Original Value Final Value 0 259,375 Cell Name Original Value Final Value $B$11 Volume FreeRide units 0 625 $C$11 Volume FreeStyle units 0 1,000 Constraints Cell Name $D$20 Factory Hrs Total $C$11 Volume FreeStyle units $B$11 Volume FreeRide units $B$11 Volume FreeRide units $C$11 Volume FreeStyle units Microsoft Excel 12.0 Sensitivity Report Cell Value Formula Status Slack 20,000 $D$20 =0 Not Binding 1,000 Not Binding 625 625 $B$11

## Step by Step Solution

There are 3 Steps involved in it

### Step: 1

Lets address each part of the problem step by step Part 1 Formulating the Linear Program Decision Model Objective Maximize Contribution Margin The contribution margin per unit is calculated as the sel...### Get Instant Access with AI-Powered Solutions

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### Step: 2

### Step: 3

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