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A factory which makes tyres has a capacity to provide 19,800 hours of machine use. The factory makes all type A tyres or all type
- A factory which makes tyres has a capacity to provide 19,800 hours of machine use. The factory makes all type A tyres or all type B tyres or a mixture of the two types.
This was information available in one period.
Tyre type | A | B |
Revenue and cost | Sh | Sh |
Selling price | 10 | 15 |
Variable Cost | 8 | 12 |
Standard hours | 3 | 4 |
Market conditions are such that no more than 4,000type A and 3,000 type B, can be sold per year. Annual fixed cost is Sh9,900.
Required: Compute the product mix to maximize the net income.
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