Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period: A B C D Demand (units) 4,000 1,000 1,800 1,500 Income K 40,000 20,000 27,000 38,400 Costs K Material 12,000 8,000 12,000 12,000 Labour 12,000 6,000 8,000 15,000 Variable Overhead 2,000 1,000 1,700 2,400 Fixed Overhead 6,000 4,000 5,000 6,000 Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available. Required: (a) Find the limiting factor if the company wishes to produce the budgeted units as above. (b) Calculate and determine the order of profitability. (c) Calculate the production mix that will maximize profit for the period and the profit that will result if that mix is produced.
Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period:
A B C D
Demand (units) 4,000 1,000 1,800 1,500
Income K 40,000 20,000 27,000 38,400
Costs K
Material 12,000 8,000 12,000 12,000
Labour 12,000 6,000 8,000 15,000
Variable
Fixed Overhead 6,000 4,000 5,000 6,000
Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available.
Required:
(a) Find the limiting factor if the company wishes to produce the budgeted units as above.
(b) Calculate and determine the order of profitability.
(c) Calculate the production mix that will maximize profit for the period and the profit that will result if that mix is produced.
(d) Calculate the increase in profit if an extra 150 units of the limiting factor are made available.
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