Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $5 and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 6 minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time.
Assume that a maximum of 50,890 units of each team shirts can be sold.
Required:
If required, round your answers to the nearest whole number.
1. What is the contribution margin per hour of machine time for each type of team shirts?
2. What is the optimal mix of team shirts?
3. What is the total contribution margin earned for the optimal mix?
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