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Beta Muscat Trading Co manufactures three products Alpha, Beta and Gamma. The selling prices, sales mix and variable expenses for the three products are given
Beta Muscat Trading Co manufactures three products Alpha, Beta and Gamma. The selling prices, sales mix and variable expenses for the three products are given below in details:- Alpha Beta Gamma Selling Price per unit Omani Rials 100 Omani Rials 120 Omani Rials 150 Sales Mix 30% 40% 30% The fixed costs of Omani Rials 220,000 is incurred every month. At present the plant is operating at 80% capacity and breakeven point has been achieved. At 80% capacity they are producing 7,000 units of Alpha, 8,000 units of Beta and 6,000 units of Gamma. Muscat Trading Co has just received an order from a customer to supply 7,000 units of Alpha, 8,000 units of Beta and 6,000 units of Gamma. Alpha Gamma Material required per unit 10 kg 12 kg 15 kg Labour hours required per unit 12 hours 10 hours 15 hours All the three products are made from the same material and requires the same type of labour. Only 219,000 kgs of raw material and 293,000 labour hours are available at the moment. The price of material is Omani Rials 3 per kg and Labour hours are charged @ Omani Rials 5 per hour. At the same time Muscat Trading Co has found a supplier who is willing to supply Alpha, Beta and Gamma of the same quality for Omani Rials 80, 100 and 125 respectively, in any quantity. You being the Management Consultant of Muscat Trading Co have been asked by the Management A. Based on the availability of raw material and labour, find out limiting factor and rank the products based on the limiting factor B. Profit/Loss if we accept the order based on our production capacity, keeping in mind the constraints C. Profit/Loss if we accept the order based on our production capacity, keeping in mind the constraints and buying the balance required to fulfill the demand
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