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Question - Eye Symmetry's founder Max Stewart makes surfboards in different lengths. He must decide on the best sales mix. Assume Max has a capacity of 240 hours of direct labor time available each month, and he makes two types of boards: Short and Long. Information on these products follows.
Surfboards
Short
Long
Selling price per unit
$700
$900
Variable costs per unit
400
500
Direct labor hours per unit
8 hours
16 hours
Required -
1. Assume the markets for both types of surfboards are unlimited. How many Short boards and how many Long boards should Max make each month?
2. How much total contribution margin does the sales mix from part 1 produce each month?
3. Assume the market for Short boards is limited to 20 per month, with no market limit for Long boards. How many Short boards and how many Long boards should Max make each month? How much total contribution margin does this mix produce each month?
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