Also,

Evaluate each of the two alternative strategies and, as a management accountant, prepare a report to the marketing director, stating your reasons (quantitative and qualitative) as to which, if either, should be adopted.

PDR plc manufactures four products using the same machinery. The following details relate to its products: Product A Product B Product C Product D per unit per unit per unit per unit Selling price 28 45 Direct material 42 Direct labour Variable overhead Fixed overhead* Profit 0.25 0.50 Labour hours Machine hours 3 4 Units Units 180 Units 250 Units 100 Maximum demand per week 200 *Fixed costs are 8,000 per week. There is a maximum of 2000 machine hours available per week. Required a) Determine the production plan which will maximize the weekly profit of PDR plc and prepare a profit statement showing the profit your plan will yield. (22 marks) b) The marketing director of PDR plc is concerned at the company's inability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this: i. To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50 per cent above normal labour rates, and variable overhead costs would be expected to increase in proportion to labour costs. ii. To buy product B from an overseas supplier at a cost of 19 per unit including carriage. This would need to be repackaged at a cost of 1 per unit before it could be sold. PDR plc manufactures four products using the same machinery. The following details relate to its products: Product A Product B Product C Product D per unit per unit per unit per unit Selling price 28 45 Direct material 42 Direct labour Variable overhead Fixed overhead* Profit 0.25 0.50 Labour hours Machine hours 3 4 Units Units 180 Units 250 Units 100 Maximum demand per week 200 *Fixed costs are 8,000 per week. There is a maximum of 2000 machine hours available per week. Required a) Determine the production plan which will maximize the weekly profit of PDR plc and prepare a profit statement showing the profit your plan will yield. (22 marks) b) The marketing director of PDR plc is concerned at the company's inability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this: i. To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50 per cent above normal labour rates, and variable overhead costs would be expected to increase in proportion to labour costs. ii. To buy product B from an overseas supplier at a cost of 19 per unit including carriage. This would need to be repackaged at a cost of 1 per unit before it could be sold