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Big Brothers Ltd has provided the following data relating to its two most popular models of an electronic product. Standard Deluxe $/unit $/unit 60 100
Big Brothers Ltd has provided the following data relating to its two most popular models of an electronic product. Standard Deluxe $/unit $/unit 60 100 10 20 Selling price Direct material Direct labour Manufacturing overhead @ $30/machine hour Monthly demand (units) 15 25 45 60 20 000 15 000 The fixed manufacturing overhead component included in the above unit costs is $20 per machine hour. On the very first day of June, a major piece of manufacturing equipment was damaged. It would take two weeks for replacement parts to arrive from Germany. Consequently, there would be only 50 000 machine hours available in June to manufacture the two models of the electronic product. Required: (a) Given the limited machine hours available in June, present a comparative financial analysis. (8 marks) (b) Based on the above financial analysis, determine how many units of each product should be produced in that month to maximise Big Brothers Ltd's profitability. (6 marks)
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