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Sir this is from exams questions Scenario 1
I do not understand from (a) how they arrived at the total required 6,930, 6,750 & 1,875
Total contribution for each fulfilled customer order for each products 6,700, 4,300 & 5,600
Each had 80, 40 & 60.
The ranking figure of 1400 for Spikes , 1650 for Trail and 2,150 for Road .
Pls how do they arrived at this figures ? Thanks in advance sir
We know what the demand for each of the products is (2,300 + 200; 1,400 + 200; and 1,650 + 200).
We also know how many metres of material are needed for each product (1.5m, 0.6m; and 1.2m).
Therefore to fulfil maximum demand, the total material needed is (2,500 x 1.5) + (1,600 x 0.6) + (1,850 x 1.2) = 6,930 metres.
It is the same logic for labour and machine time.
As far as the ranking is concerned, it is just as I explain in my free lectures on key factor analysis (bearing in mind that they have to supply 200 of each to RunWild otherwise there is a penalty).
Yes thank sir . I got how you calculated the totals but the contribution per pair of shoes for the Fulfil customer order:
200 Road 80 33.50 6,700
200 Spikes 40 21·50 4,300
200 Trail 60 28·00 5,600
how was the contribution for each product calculated ? sales per each product varies so also the variable costs.
how was 33.50 for Road calculated
For the Fulfil order, the selling price for Road is 60 – 8 = $52.
The variable cost is 7.50 + 7 + 4 = $18.50.
Therefore the contribution is 52 – 18.50 = $33.50.