SP per unit 25 20 15 10

Annual sales quantity 540,000 450,000 360,000 300,000

Jem Kit Laf Mok

Sales 13,500,000 9,000,000 5,400,000 3,000,000

Variable costs 11,250,000 7,258,065 4,251,969 2,307,692
CM 2,250,000 1,741,935 1,148,031 692,308
Fixed costs 1,080,000 900,000 720,000 600,000
Profit last year 1,170,000 841,935 428,031 92,308
Profit per month last year 97,500 70,161 35,669 7,692
CM per month last year 187,500 145,161 95,669 57,692

FC % 33% 27% 22% 18%

FC as percentage of sales 8% 10% 13% 20%
FC per unit 2 2 2 2

Skilled labor (annual) 4,500,000 2,903,226 2,125,984 1,153,846

Skilled labor (monthly) 375,000 241,935 177,165 96,154

Per unit
Sales 25.00 20.00 15.00 10.00
Variable costs 20.83 16.13 11.81 7.69
CM per unit 4.17 3.87 3.19 2.31

Skilled labor per unit 8.33 6.45 5.91 3.85

Committed min quantity per month 10,000 10,000 5,000 5,000
Required skilled labor per month 83,333 64,516 29,528 19,231
Assured skilled labor per month
Excess

CM per skilled labor per unit 0.50 0.60 0.54 0.60

If excess to be allocated to product with highest CM per skilled labor per unit and high CM: Product Kit

Excess 253,392
Skilled labor per unit 6.45
Additional Quantity 39,276

CM per month 41,667 190,745 15,945 11,538

FC
Profit (loss) per month

If excess to be allocated to product with highest CM: Product Jem

Excess 253,392
Skilled labor per unit 8.33
Additional Quantity 30,407

CM per month 168,362.77 38,710 15,945 11,538

FC
Profit (loss) per month
 TOTAL

30,900,000
25,067,725
5,832,275
3,300,000
2,532,275
211,023
486,023

100%
11%

10,683,056
890,255

196,608
450,000
253,392

h CM: Product Kit

259,895
275,000
(15,105)

234,556
275,000
(40,444)
 Iron Frames Steel Frames Steel Housing Assembly Unit
DM 5 6 18 8
DL 1.5 1 5 3
Set-up Cost 0.4 0.3 1 0.4
TOTAL VC to manufacture 6.9 7.3 24 11.4
Purchase cost 10 11 32 18
CM per unit 3.1 3.7 8 6.6
Hours required per unit 1 4 5 2
CM per unit per hour 3.10 0.93 1.60 3.30
Produce items starting from the ones with the highest CM per unit per hour which will absorb the fixed costs:
Assembly unit 100,000
Iron Frames 80,000
Steel Housing 4,000
Outsource the rest 40,000 11,000
 Total available machine hours 300,000
Less:
To produce assembly unit 200,000
100,000
To produce iron frames 80,000
20,000
Divided by hours required for steel housing 4,000

orb the fixed costs: