1. Based on quantitative factors alone, how many units of each product should McCormack produce in the upcoming month to maximise the companys profits? Show all workings.

The next 3 questions relate to the information below (and the information provided previously about the company)

Based on both quantitative and qualitative factors, McCormack decides to prioritise the production and sale of Product A in the upcoming month.

An external supplier, Supplier X, then approaches McCormack with an offer to supply Product B to be sold in the upcoming month. Apart from the price that is paid to Supplier X, there is NO ADDITIONAL cost that needs to be incurred by McCormack in order to sell the units that are purchased externally from Supplier X.

2. What is the highest (break-even) price that McCormack would be willing to pay Supplier X for each unit of Product B? Consider only quantitative factors.

3. How many units of Product B would McCormack be purchasing from Supplier X at the price calculated in the previous question to satisfy the demand for its products in the upcoming month. Assume that McCormack is willing to purchase Product B at this price even though it earns zero profit. Consider only quantitative factors. Show all workings.

4. McCormack is now considering purchasing the entire quantity of the upcoming months demand for Product B from Supplier X. What would be the highest (breakeven) price per unit at which McCormack would be willing to purchase the 1,000 units of Product B from Supplier X? Consider only quantitative factors. Show all workings.

The next 3 questions relate to the information below (and the information provided previously about the company).

As mentioned previously, based on both quantitative and qualitative factors, McCormack decides to prioritise the production and sale of Product A in the upcoming month.

You are now informed that McCormack had decided NOT to transact with Supplier X.

Another external supplier, Supplier Y, then approaches McCormack with an offer to supply Product A for the upcoming month. Apart from the price paid to Supplier Y, there is NO ADDITIONAL cost that needs to be incurred by McCormack in order to sell the units that are purchased externally from Supplier Y.

5. What is the highest (break-even) price that McCormack would be willing to pay Supplier Y for each unit of Product A? Consider only quantitative factors. Show all workings.

6. How many units of Product A would McCormack be purchasing from Supplier Y at the price calculated in the previous question to satisfy the demand for its products in the upcoming month. Assume that McCormack is willing to purchase Product A at this price even though it earns zero profit. Consider only quantitative factors. Show all workings.

7.

You are now told that due to issues that are beyond Supplier Ys control, it is only able to supply Product A if McCormack's order is at least for a certain (minimum) quantity of units. This minimum quantity is 50% greater than the number of units calculated in the previous question.

Would this change the highest price that McCormack is willing to pay Supplier Y for each unit of Product A based on quantitative factors alone i.e., the price calculated in Question 25? Explain. If the answer is it depends, include all factors that would affect your answer as part of your explanation. Calculations are not required.

The next 7 questions relate to the information below [19 marks] McCormack Company (the company) makes two products in a single facility. Information about the two products for the upcoming month are as follows: Table 1 Product A Product B Variable cost per unit $60 $95 Machine hours per unit 1 3 Selling price per unit $100 $200 Demand from customers (in units) 2,000 1,000 Inventory at the start of the upcoming month O 0 The company experienced an unexpected breakdown of one of the machines (which is used to produce both products) in the current month. The machine is not expected to be repaired anytime soon. As a result, only a total of 4,010 machine hours are available during the upcoming month to produce both products