A company manufactures two types of products, P1 and P2. Each product uses a lathe and milling machine. The processing time for P1 on the lathe is five hours and on the milling machine it is four hours. The processing time for P2 on the lathe is 10 hours and on the milling machine it is four hours. The maximum number of hours per week available on the lathe and the milling machine are 60 hours and 40 hours, respectively. The profit per unit of selling P1 and P2 are RO 6.00 and RO 8.00, respectively. Formulate a linear programming model to determine the production volume of each product such that the total profit is maximized. Solution The data of the problem are summarized in Table 1

A company manufactures two types of products, P1 and P2. Each product uses a lathe and milling machine. The processing time for P1 on the lathe is five hours and on the milling machine it is four hours. The processing time for P2 on the lathe is 10 hours and on the milling machine it is four hours. The maximum number of hours per week available on the lathe and the milling machine are 60 hours and 40 hours, respectively. The profit per unit of selling P1 and P2 are RO 6.00 and RO 8.00, respectively. Formulate a linear programming model to determine the production volume of each product such that the total profit is maximized. Solution The data of the problem are summarized in Table 1

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity is given below:
Han Products manufactures 22,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.60 10.00 2.40 6.00 $ 22.00 An outside supplier has offered to sell 22,000 units of part S-6 each year to Han Products for $20 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $72,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?
Becky's Bakery produces two products, cake and pie. Becky's Bakery sells each cake for $15.00 and each pie for $10.00. Variable costs for cakes and pies are respectively, $7.00 and $6.00. There are 3,200 direct labor hours per month available for producing one of the two products. Fixed manufacturing overhead cost is allocated at $1,000 per month. Each cake and pie require 2 direct labor hours. Compute the following: A. Contribution margin per unit for each product. B. Contribution margin per direct labor hour for each product. C. The total number of products produced if only that product is produced each month. D. Income for a month if only one product is produced and total production is sold.
A chain saw requires 2 hours of assembly and a wood chipper 5 hours. A maximum of 30 hours of assembly time is available. The profit is $170 on a chain saw and $250 on a chipper. How many of each should be assembled for maximum profit? To attain the maximum profit, assembiechain saws and wood chippers.
A small company produces two products, x and y. Product x requires 1 hour of labour and 6 tons of raw materials, whereas each unit of product y requires2 hours of labour and 5 tons of raw material. The number of hours available each week is 40 and the available raw materials each week is 150 tons. If the contribution to profit is £2 per unit of product x and £3 per unit of y, determine the weekly production mix that will maximize profits.
Consider zagol manufacturing which is engaged in the manufacturing of product ABC. To produce one unit of the product the company incurs the following costs: Direct material ______$5/kg Direct labor_________$10/hour Total Manufacturing overhead __________________$30000 The company produces a total of 10000 units per month. And the actual price the product is sold is around $24. Company XYZ offers to buy a total of 5000 units this month at the price of $ 17/unit. Would you accept the order if you are the manager? (assume 20% of the manufacturing overhead is variable cost
Spring, Incorporated manufactures two products. It currently has 1,000 hours of direct labor and 2,080 hours of machine time available per month. The following table lists the contribution margin, labor and machine time requirements, and demand for each product: Unit contribution margin Demand Labor time Machine time Product A $21 1, 040 units 3/4 hour 1 hour How much of each product should Spring manufacture per month? Product B $18 2,080 units 1 hour 1/2 hour
Chenwang Manufacturing has 18,000 labor hours and 120,000 grams of material. The cost of labor per hour is $10, and material costs 60 cents per gram. The company manufactures three products: A, B and C. Quantity of material used per unit of each product, labor time used, demand, and selling price are given in the table below. Production has to equal or exceed demand. Image has been attached with the further details.
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $ 200 $ 230 Variable costs per unit 85 138 Contribution margin per unit $ 115 $ 92 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 650 units 250 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $11,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)
The Amber is a product made by Howells Ltd. The following data applies to its production: In one standard hour, 5 units of Amber should be made (i.e. one Amber every 12 minutes). Actual production for the period was 250 units. Actual hours worked to achieve this production = 40 hours. The basic rate of pay = $12/hour. A bonus of 60% of the basic rate of pay is earned for every one hour of production time saved through efficient production. What is the labour cost for making 250 Amber units? a) $600 b) $672 c) $552 d) $480