Birds Ltd

Bird Ltd makes $3$ types of products: Pidgeon, Dove and Sparrow. Extracts from the budget for

the next year are as follows:

Pidgeon Dove Sparrow

Demand and production $($units$)1,0001,5002,000$

The following information is per unit of each product

Per unit Pidgeon Dove Sparrow

AED AED AED

Selling price $87170154$

Materials $154030$

Labour $205040$

Variable overhead $123024$

Labour will be paid at AED $10$ per hour

The company expects the total fixed cost budget to be $120,000$

Required:

Part $($a$).$

It has now been realised that there will only be $15,000$ labour hours available next year.

Calculate the production plan that will maximise profit for Bird Ltd for the next year. State

what that plan will be $($All workings must be shown$)$

Part $($b$)$

Alternativelythe company is interested in ONLY producing the product with the highest gross

profit.

Calculate which product has the highest gross profit.

What would be the Break Even Point?

Can the company cover its fixed cost with the existing demand? How many products would

the company need to sell to make $50,000$ profits?