Sam Shade Corp. produces 3 models of tinted sunglasses (X, Y and Z) with monthly accounting...

 

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Sam Shade Corp. produces 3 models of tinted sunglasses (X, Y and Z) with monthly accounting data per unit as follows: Estimated Demand (units) Selling Price ($) Less variable Costs X 700 80 24 Tinting materials ($) 15 9 Other Variable Costs ($) 27 40 Traceable Fixed Costs ($) 1,500 8,300 Allocated Fixed Costs ($) 2,500 5,500 For the next few months Sam can only purchase 5,000 grams of tinting material per month at a price of $3.00 per gram due to a worldwide shortage of tinting material. Required: a) Calculate the 3 relevant shadow prices (3 marks) b) How many units of each type of sunglasses should Sam produce to maximize his CM? (4 marks) c) What is the maximum CM Sam Shade can make under these circumstances? (1 mark) 24 Y 500 56 2,200 2,000 Z 1000 70 Sam Shade Corp. produces 3 models of tinted sunglasses (X, Y and Z) with monthly accounting data per unit as follows: Estimated Demand (units) Selling Price ($) Less variable Costs X 700 80 24 Tinting materials ($) 15 9 Other Variable Costs ($) 27 40 Traceable Fixed Costs ($) 1,500 8,300 Allocated Fixed Costs ($) 2,500 5,500 For the next few months Sam can only purchase 5,000 grams of tinting material per month at a price of $3.00 per gram due to a worldwide shortage of tinting material. Required: a) Calculate the 3 relevant shadow prices (3 marks) b) How many units of each type of sunglasses should Sam produce to maximize his CM? (4 marks) c) What is the maximum CM Sam Shade can make under these circumstances? (1 mark) 24 Y 500 56 2,200 2,000 Z 1000 70

Answer rating: 100% (QA)

a Shadow price of tinting materials Shadow price of tinting materials Change in Total ProfitChange i... View the full answer