Question
Bow Paul Pte Ltd makes and sells three types of hand-held vacuum cleaners for the local market. The standard cost and revenue data are provided
Bow Paul Pte Ltd makes and sells three types of hand-held vacuum cleaners for the local market. The standard cost and revenue data are provided below.
Basic ($) | Plus ($) | Super ($) | |
Materials | 80 | 120 | 189 |
Manufacturing labour | 32 | 40 | 56 |
Fixed overheads | 5 | 10 | 15 |
Selling price | 320 | 420 | 620 |
Manufacturing labour includes both manufacturing and installation labour, who are employed hourly based on production requirements. Workers are paid $8 per hour. Fixed overhead costs for the period are expected to be $400,000 for a total capacity of 80,000 machine hours. Fixed overheads are allocated to products based on machine hours.
The market demand for vacuum cleaners for the year is 55,000 units for Basic, 11,000 units for Plus and 2,200 for Super.
Develop, with clear supporting computations, a production schedule that will maximise the company's profit. Based on your recommended production schedule, calculate the company's expected profit.
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