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Jakobina Plc manufactures three products: Biscuits, Burns and Muesli. Makie (Pty) Ltd supplies Jakobina Plc two of the raw materials that are used in producing

Jakobina Plc manufactures three products: Biscuits, Burns and Muesli. Makie (Pty) Ltd supplies Jakobina Plc two of the raw materials that are used in producing all the three products. Owing to an unexpected increase in demand and some internal disruptions Makie Ltd is only able to meet the following quantities for the next quarter: Flour Butter 1,180 kg 820 kg No other source of supply can be found for the next accounting period to help overcome any possible shortage of the two raw materials. Information in respect of the three products manufactured by Jakobina Plc is as follows: Biscuits Cake Muesli Selling price per unit (M) 4.00 6.00 5.00 Variable cost per unit (M) 2.00 3.00 2.80 Quantity of material used per unit manufactured: Flour (kg) Butter (kg) 2.00 2.20 1.50 1.50 2.00 2.20 Maximum sales demand (units) 240 180 120 Owing to lack of storage facilities, no Required: finished good stocks are held. a) Recommend a product mix which will maximise the profits of Jakobina Plc for the forth-coming Quarter i.e, (plan A) (8 marks) b) Jakobina Plc has a valued customer to whom the company wishes to guarantee the supply of 80 units of muesli and 160 units of biscuits in the next quarter. Show how this would affect the production plan. Assume the valued customer's demand is part of the market demand i.e. (plan B) (5 marks) c) Calculate the total contribution for production plan A and production plan B (assume the contribution per unit for the 80 units of biscuits supplied to the valued customer is M2.75 per unit and the 180 units of muesli is M3.20 per unit). d) Discuss TWO assumptions for Key Factor Analysis (8 marks) (4marks)

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