Question
Green life Co is an organic product producing and selling 2 different body creams to beauty salons. Lotions are the new product and were first
Green life Co is an organic product producing and selling 2 different body creams to beauty salons. Lotions are the new product and were first launched 6 months ago. Each of the products has a special ingredient, sourced from a remote part of a country.
Green life company sells two products, Lotion, and Body Butter, for which the following details are available.
Lotion ($) | Body butter ($) | |
Direct labour (@ $5 per hr) | 15 | 10 |
Direct materials (@ $2 per kg) | 2 | 5 |
Variable overheads | 2 | 2 |
Fixed overheads | 3 | 3 |
22 | 20 | |
Selling price | $25 | $22 |
Maximum demand per month 10,000 lotions and 8,000 body butter
Required
If only 40,000 labour hours and 35,000 kg of material are available per month, what is the optimal production plan and the total profit for next month for Green life Co? (10 marks)
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