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C. Metro Sdn Bhd manufactures small components to be incorporated into the car parts produced by a local manufacturer. There are three (3) components manufactured
C. Metro Sdn Bhd manufactures small components to be incorporated into the car parts produced by a local manufacturer. There are three (3) components manufactured by Metro Sdn Bhd: Component A, B and C. il Tel. The production manager is planning the production schedule for next month. He has been informed that the company will be facing a shortfall in either labour hours or machine hours, which will restrict the production of next month. The production manager has been furnished the following information for December 2022 Costs per unit Direct material Direct labour Production overhead Other allocated fixed cost Component A Component B Component C RM RM RM 10 12 16 26 28 22 8 7 5 7 9 6 Selling price per unit 105 120 110 10,000 15,000 7,500 Estimated production and sales (units) Additional information: 1. In December 2022, the total direct labour hours and total machine hours available are 60,000 hours and 65,000 hours, respectively. 2. The requirement of direct labour hours and machine hours for each component are as follows: Component A 2 hours Component B 2 hours Component C 1 hour Direct labour hours required Machine hours required 3 hours 2 hours 1 hour 3. For each component: ii. i. RM2.00 of production overhead cost is fixed in nature. The remaining amount representing the variable production overhead. Variable selling overhead is 5% of the selling price. Required: i. Identify whether labour hours or machine hours is the limiting factor. Show all calculations. Dacodan VOLVO insan Cuoci mnnnnomont of Motra Sdn i. Identify whether labour hours or machine hours is the limiting factor. Show all calculations. Based on your answer in part (1) above, suggest to the management of Metro Sdn Bhd the optimal production plan to be produced for the month of December 2022
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