Question
Kibe Ltd Company manufactures 5 products Alpha, Beta, Gamma, Delta and Eta. There is a shortage of skilled workers and it takes over a year
Kibe Ltd Company manufactures 5 products Alpha, Beta, Gamma, Delta and Eta. There is a shortage of skilled workers and it takes over a year to train new recruits adequately. The Managing Director has asked you for advice as to which order of priority on the product range would give best use of the skilled labour resources available. The following budget has been provided: Product Alpha Beta Gamma Delta Eta Max production in units 3,000 4,000 6,000 7,000 9,000 Selling price per unit (Kshs) 16 12 18 15 34 Variable cost per unit Material 3 5 4 7 6 Skilled labor Kshs 4 per hour 4 4 6 2 8 Unskilled labour Ksh 2 per hour 2 2 1 1 4 3 Variable overhead 2 2 1 1 4 The skilled labor available amounts to Kshs. 80,000 hours in the period and there are fixed costs of Kshs 22,800. Required: Calculate the product mix which would result in the maximum profit. (20 Marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started