Serial Problem Business Solutions L.O. P1, A1 Santana Rey has found that her lin

Question

Serial Problem Business Solutions L.O. P1, A1

Santana Rey has found that her line of computer desks and chairs has become very popular and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows.

Santana has determined that she only has 1,425 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.

Determine the optimal sales mix and the contribution margin the business will earn at that sales mix.(Input all amounts as positive values. Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "$" sign in your response).

Santana Rey has found that her line of computer desks and chairs has become very popular and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows.

Explanation / Answer

Cont Margin per DL Hr for Desk = $855.75/7 = $122.25

COnt Margin pe chair = $282/6 = $47

So Desk is giving highr CM per DL hrs.

So 177 Desk will need 177*7= 1239 DL Hrs

Balance DL hrs = 1425-1239 = 186

This will give 186/6 = 31 Chairs.

So Optimal Sales Mix is 177 Desk & 31 Chairs

CM at this sales mix = 177*855.75+31*282 =$160,209.75

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