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Here are a couple aspects such as the intro, analysis decision, and conclusions that can be handed out to everyone and then someone can put it all together



In order to maximize the company’s profitability, All Sports Company should purchase 9,000 tackle boxes from Maple Products, manufacture 17,500 skateboards, and manufacture 1,000 tackle boxes.

1 Unit Contribution Margin Purchased Manufactured
Tackle Tackle Skate-
Boxes Boxes boards
Selling price $91.00 $91.00 $50.00
 Material -73 -22 -17.5
 Direct labor -18.75 -7.5
 Manufacturing overhead*  * -6.25 -2.5
 Selling and administrative cost  (4.00) -11  (3.00)
Contribution margin $14.00 $33.00 $19.50
Direct-labor hours per unit 1.25 0.5
Contribution per hour $26.40 $39.00
*Calculation of variable overhead per unit:
   Tackle boxes:
Direct-labor hours $18.75 ÷ $15.00 = 1.25 hours
Overhead per direct-labor hour $12.50 ÷ 1.25 = $10.00
Capacity 8,000 boxes ´ 1.25 = 10,000 hours
Total overhead 10,000 hours ´ $10 per hour = $100,000
Total variable overhead $100,000 – $50,000 = $50,000
Variable overhead per hour $50,000 ÷ 10,000 = $5.00
Variable overhead per box $5.00 ´ 1.25 = $6.25
Direct-labor hours $7.50 ÷ $15.00 = .5 hours
Variable overhead $5.00 ´ .5 = $2.50
The optimal use of All Sports Company’s (direct labor) is to manufacture skateboards, up to the number of skateboards that the company can sell (17,500). With its remaining labor time, All Sports Company can produce 1,000 tackle boxes.
The optimal use of All Sports Company’s available direct-labor hours (DLH):
Item Quantity DLH Total Balance Unit Total
per DLH of Contri- Contri-
Unit DLH bution bution
Total hours 10,000
Skateboards 17,500  .50 8,750  1,250 $19.50 $341,250
Make boxes  1,000 1.25 1,250 33   33,000
Buy boxes  9,000 14  126,000
Total contribution $500,250
 Contribution from manufacturing 8,000 boxes  264,000
  (8,000 ´ $33.00)
Improvement in contribution margin $236,250

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