A company has the following production planned for the next four weeks. The figures reflect the full capacity level of operations. Planned output is equal to the maximum demand per product.

ProductABCDSelling priceR1 600R2 140R1 000R1 400Direct materialsR240R560R220R400Direct labourR660R880R330R220Variable overheadR240R180R240R180Fixed overheadR160R100R80R120ProfitR300R420R130R480Planned output300125240400Direct labour hours per unit6832

The direct labour force is threatening to go on strike for two weeks out of the coming four. This means that only 2 160 hours will be available for production rather than the usual 4 320 hours.

If the strike goes ahead, which product or products should be produced if profits are to be maximised?

Question 9Answer

a.

B and C

b.

B and D

c.

D only

d.

D and A