How much would you be willing to pay for extra yardage

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Reference no: EM133078611

Question - Cinderella Incorporated is currently producing three lines of dresses. The data on each dress is as follows:

 

BLUE

PINK

ORANGE

Selling price

$80

$56

$70

Variable expenses

 

 

 

Direct materials

24

15

9

Labour and overhead

24

27

40

 

48

42

49

Contribution margin

$32

$14

$21

Contribution margin ratio

40%

25%

30%

The same material is used in each dress. The material costs are $3 per yard, with a maximum of 5000 yards available each month. Demand for the dresses is very strong with demands for 300 Blue; 1000 Pink and 500 Orange.

Required -

1. Can we meet the current demand of all dresses?

2. In which order would you accept orders and at what amounts?

3. How much would you be willing to pay for extra yardage in order to complete demand 100%?

4. Give two other alternatives for the company to meet demand.

Reference no: EM133078611

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