Q1.Determine the production plan that will maximise the weekly profit of MJD Ltd and prepare a profit statement showing the profit your plan will yield. Q2.The marketing director of MJD Ltd is concerned about the company’s ability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this:To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50% above normal labour rates, and variable overheads costs would be expected to increase in proportion to labour costs.To buy product B from an overseas supplier at a cost of £19 per unit; which includes the cost of delivery. This purchased product would need to be repackaged at a cost of £1 per unit before it can be soldEvaluate each of the two alternative strategies and write a report to the marketing director discussing which strategy should be adopted. MJD Ltd manufactures four products using the same machinery. The followingdetails relate to its products:Product:Selling priceDirect materialDirect labourVariable overheadFixed overhead *ProfitLabour hours per unitMachine hours per unitA£ per unit2854388*0.254Product:AMaximum demand per week: 200 unitsFixed costs are £8,000 per weekAvailability per week:B£ per unit306000 WA40.253B180 units£ per unit↳ 8045861670.54D£ per unit42268866Machine hours: 2,000 hoursLabour hours: 300 hours; though 25 hours of this is considered 'idletime'160.55CD250 units 100 units

The scarce resource (bottleneck activity) plays the most important role in decision making. There…

Answered: MJD Ltd manufactures four products…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q1.Determine the production plan that will maximise the weekly profit of MJD Ltd and prepare a profit statement showing the profit your plan will yield.

Q2.The marketing director of MJD Ltd is concerned about the company’s ability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this:

To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50% above normal labour rates, and variable overheads costs would be expected to increase in proportion to labour costs.
To buy product B from an overseas supplier at a cost of £19 per unit; which includes the cost of delivery. This purchased product would need to be repackaged at a cost of £1 per unit before it can be sold

Evaluate each of the two alternative strategies and write a report to the marketing director discussing which strategy should be adopted.