1. Bella Corporation is a small company making two products with the following financial details: Bella simple Bella deluxe Selling price Variable costs 16 6 24 16 The weekly fixed costs are 3,000 The use of resources by each product is: Bella simple Material 45 Material 96 Machine time 4 minutes Labour time 15 minutes 0.4 kg 2 kg Bella deluxe 1.1kg 1.5kg 3 minutes 25 minutes The materials are difficult to obtain and are made by only one supplier. There will be a delay in delivery of the ingredients for the next week so Bella Corporation will use the ingredients in inventory of: Material No.45 - 500 kg Material No.96 - 1,000 kg The weekly machine capacity is 40 hours. 1 The weekly labour time is 200 hours. Five employees are paid for a 40 hour week even if there is not enough work to fill 40 hours. The corporation can sell all of its production. Required: a) Using a graphical approach calculate the most profitable production quantities for the week, given the constrained resources and calculate the net income which will be made. (12 marks) b) In this particular week the resou which could be increased is labour. The company could obtain more labour time by paying overtime of 10 per hour. Calculate how many hours should be paid for and calculate whether this action would improve net income, considering the other constraints which exist. (8 marks) 1. Bella Corporation is a small company making two products with the following financial details: Bella simple Bella deluxe Selling price Variable costs 16 6 24 16 The weekly fixed costs are 3,000 The use of resources by each product is: Bella simple Material 45 Material 96 Machine time 4 minutes Labour time 15 minutes 0.4 kg 2 kg Bella deluxe 1.1kg 1.5kg 3 minutes 25 minutes The materials are difficult to obtain and are made by only one supplier. There will be a delay in delivery of the ingredients for the next week so Bella Corporation will use the ingredients in inventory of: Material No.45 - 500 kg Material No.96 - 1,000 kg The weekly machine capacity is 40 hours. 1 The weekly labour time is 200 hours. Five employees are paid for a 40 hour week even if there is not enough work to fill 40 hours. The corporation can sell all of its production. Required: a) Using a graphical approach calculate the most profitable production quantities for the week, given the constrained resources and calculate the net income which will be made. (12 marks) b) In this particular week the resou which could be increased is labour. The company could obtain more labour time by paying overtime of 10 per hour. Calculate how many hours should be paid for and calculate whether this action would improve net income, considering the other constraints which exist. (8 marks)
