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Based on the enquiries made by current and potential customers, you have estimated the following for the coming year: Estimated Demand in Selling Price per
Based on the enquiries made by current and potential customers, you have estimated the following for the coming year: Estimated Demand in Selling Price per Direct Materials Cost per Unit $ 5 Direct Labour Cost per Unit $ 15 Product Units Unit $ 50 A 30,000 B 50,000 60 10 10 40,000 150 15 30 D 25,000 100 15 20 The following information is also available: The direct labour rate is $50 per hour and the factory has a capacity of 50,000 hours. For the next year, Montreal is unable to expand this capacity. Montreal is unwilling to increase its selling prices. Apart from direct materials and direct labour, the only other variable expense is variable overhead. The variable overhead is 100% of the direct labour cost. Fixed manufacturing overhead is estimated to be $2.25 million for the coming year. Fixed marketing and administrative expenses are estimated to be $1,750,000 for the coming year. Instructions Determine which products and how many units of each Montreal should produce in the coming year and calculate the maximum profit achievable from full capacity production
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