a) Calculate the shortfall (if any) in hours of installation labor. b) Determine the best production plan assuming the company wishes to maximize profit. c) Calculate the maximum profit that could be achieved from the plan in part (b) above. Having investigated installation labor availability, the firm thinks that additional installation would become available by offering GH¢12 per hour and thus overcoming the labor shortage. Based on the result obtained above, you are required to advise the firm whether or not to implement this proposal.
Q2
Trinity product Limited makes and sells three types of electronic security systems for which the following information is available.
Standard cost and selling price per unit.
|
DETAILS |
DAY SCAN |
NIGHT SCAN |
OMNI SCAN |
|
GH¢ |
GH¢ |
GH¢ |
|
|
Materials |
70 |
110 |
155 |
|
Manufacturing Labour |
40 |
55 |
70 |
|
Installation Labour |
24 |
32 |
44 |
|
Variables |
16 |
20 |
28 |
|
Selling Price |
250 |
320 |
460 |
The fixed cost for the period is GH¢450,000 and installation labor, which is highly skilled is available for 25,000 hours only in a period and is paid GH¢8 per hour. Both manufacturing and installation labor is variable costs. The maximum demand for the period is Day scan 2,000 units; Night scan 3,000 units; Omni scan 1,800 units.
Required:
a) Calculate the shortfall (if any) in hours of installation labor.
b) Determine the best production plan assuming the company wishes to maximize profit.
c) Calculate the maximum profit that could be achieved from the plan in part (b) above. Having investigated installation labor availability, the firm thinks that additional installation would become available by offering GH¢12 per hour and thus overcoming the labor shortage. Based on the result obtained above, you are required to advise the firm whether or not to implement this proposal.
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