Shiny Shoes produces standard and premium shoe polish. The standard polish is sold at $3...
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Accounting
Shiny Shoes produces standard and premium shoe polish. The standard polish is sold at $3 per can, and the premium polish is sold at $5 per can. The variable cost of making the standard polish is $1.80 per can. It costs an extra $1.20 to make the premium polish. It takes 6 labor hours to produce 1,000 cans of standard polish and 9 labor hours to produce 1,000 cans of premium polish. There are 2,500 hours of labor time available for production each week. The maximum weekly sales for the standard and premium polish are 30,000 and 10,000 cans, respectively. Fixed production costs total $100,000 per year. All selling costs are fixed.
Required: (a) Determine the optimal production level in number of cans for each product. (b) Prepare the ledgers for both types of shoe polish showing all necessary entries. (c) Calculate the contribution margin for each type of shoe polish.
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You can see the logs in the Dashboard.