ROOTS CLOTHING COMPANY The Roots Clothing Company produces scarf,
sweater, shirts and pants. The clothing requirements are: for the scarf it requires 1.25 square yards of cloth, 2.4 square yards of cloth for the sweater, 2 square yards of cloth for the shirt and 3 square yards of cloth for the pants.
During the next 4 months the following demands for scarf, sweater, shirts and pants must be met (on time): month #1, 150 scarf, 400 sweaters, 1000 shirts and 1500 pants; month # 2, 160 scarf, 300 sweaters, 800 shirts and 1200 pants; month # 3,50 scarf, 100 sweaters, 1000 shirts and 600 pants; month #4,450 scarf, 700 sweaters, 3000 shirts and 2500 pants. The company operates at optimum capacity to meet the demands.
During each month the following resources are available: month #1, 25,000 square yards; month # 2, 5000 square yards; month # 3, 6,000 square yards; month # 4, 5,000 square yards. Cloth that is available during month 1 and is not used can be used during month 2. Same apply to the succeeding months. For labor cost during each month it cost $14 to make an article of scarf, $ 28 for sweater, $7 for shirt and $ 28 for pants. The cost of each square yard of cloth is $ 6.25 for the 1st and 2nd month. There is an increase of 6% in the cost of cloth for month 3 and 5 % for month 4 because of the suppliers' control of the market. It is expected that the supplies of cloth will dwindle or may even hit zero at the end of the year because of the ongoing crisis in the textile industry all over the world.
Cost for resources/materials are computed based on used. Thus, for the first month, only the used square yards of cloth will be reflected in the materials cost and not for the entire 25,000 square yards. This is a common practice in price determination among manufacturers.
There are monthly costs which are as follows: rent which is $5,000, office supplies $ 300, utilities at $ 275 and salary of employees $ 12,000.
Selling price per product type is equal to mark up plus average cost. Average Cost is equal to Total Cost per product per month divided by quantity of the product type produced for the month. The mark up are 38%, 56%, 28% and 75% respectively for scarf, sweater, shirt and pants ---------------------------FOCUS ON HERE PLZ
1. What is the monthly price for each product?
2. What is the monthly profit for each product?
3. What is the total profit in four months?
4. What is the remaining inventory of cloth per month?
5. Can you forecast a shortage or surplus of cloth for the future given a certain demand and available materials?