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Leek & Co manufactures four products, A, B, C and D. Details of sales prices, costs and resource requirements for each of the products are

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Leek & Co manufactures four products, A, B, C and D. Details of sales prices, costs and resource requirements for each of the products are as follows. Product A Product B Product C Product D E E E E Sales price 1.40 0.80 1.20 2.80 Material cost 0.60 0.30 0.60 1.00 Direct labour cost 0.40 0.20 0.40 1.00 Minutes Minutes Minutes Minutes Machine time per unit 5 2 3 6 Labour time per unit 2 1 2 5 Units Units Units Units Weekly sales demand 2,000 2,000 2,500 1,500 Machine time is a bottleneck resource and the maximum capacity is 400 machine hours each week. Operating costs, including direct labour costs , are $5,440 each week. Direct labour costs are E12 per hour, and direct labour workers are paid for a 38-hour week, with no overtime. Required: a) Determine the quantities of each product that should be manufactured and sold each week to maximise profit and calculate the weekly profit. b) Calculate the throughput accounting ratio at this profit-maximising level of output and sales. (Adapted from ACCA F5, Kaplan)

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