Industrial Fitments Ltd produce three types of shelving - 'Factory', 'Stores'

and 'Office', which are made from the same basic material. mild steel. which costs £1 per square metre . The standard unit cost of the three products are as follows :

Sales expectations for the forthcoming month are:

Owing to an industrial dispute, suppliers of mild steel have intimated that they will be able to supply only 2,500 square metres during the month.
You are required to:

(a) prepare a statement which will enable you to advise management on the most profitable production pattern to pursue;

(b) mention briefly the matters which should receive the attention of management when confronted with the type of situation described above.

Transcribed Image Text:

'Factory' 'Stores' 'Office' p Direct material: Mild Steel 84 78 Attachments 14 25 33 75 30 Direct labour: Machining 10 15 Spraying 4 196 57 Unit selling prices are: 175 186 190