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A company has several of its staff absent due to being sick with Covid-19 or in isolation and can only produce a limited quantity of
A company has several of its staff absent due to being sick with Covid-19 or in isolation and can only produce a limited quantity of products due to this shortage of available labour hours (DLHs). It is expected that this will last for up to three months. The details for two of its product lines including the weekly demand for these products are given below. As can be seen, not all production is possible of both these two products during this time of capacity constraint. Product A Product B Sell Price (per unit) $2.50 $5.60 Variable production costs per unit $0.90 $2.30 Contribution margin (SP-VC) $1.60 $3.30 Labour Hour Time to produce per unit: 0.01 0.02 Weekly Demand (if all orders could be fulfilled 100000 80000 in metres) Required: If the company only had 1800 Labour Hours available each week, analyse the product information and as a management accountant, advise how many of the LEAST favoured product should be made each week to maximise profitability until full production can be resumed. (3 Marks) Note on correct response entry: If you had a set of numbers such that your decision was to make all of product X first then only 100 of product Y, then enter 100 Y or alternatively if you decided to produce all product Y first and only 100 of X, then enter 100 X as your answer. In this case you will indicate either A or B
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