Peak Performance Gear manufactures basic and advanced model tents. The basic tent is sold at...
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Peak Performance Gear manufactures basic and advanced model tents. The basic tent is sold at $100 each, and the advanced tent is sold at $180 each. The variable cost of making the basic tent is $60 each. It costs an extra $40 to make the advanced tent. It takes 15 labor hours to produce 100 basic tents and 20 labor hours to produce 100 advanced tents. There are 2,800 hours of labor time available for production each week. The maximum weekly sales for the basic and advanced tents are 600 and 200 units, respectively. Fixed production costs total $300,000 per year. All selling costs are fixed.
Required: (a) Determine the optimal production level in number of units for each product. (b) Prepare the ledgers for both types of tents showing all necessary entries. (c) Calculate the contribution margin for each type of tent.
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You can see the logs in the Dashboard.