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Nano Ltd. manufactures three different types of electric scooters: X,Y and Z. It was expected that the production and demand for the next year on
Nano Ltd. manufactures three different types of electric scooters: X,Y and Z. It was expected that the production and demand for the next year on these products as follows: Additional details about the products are also as follows: Nano Ltd. pays labour 8 an hour and expects its fixed overheads to be 480,000. Required: a) Calculate the production plan that will maximise profit for Nano Ltd. for next year given that Nano Ltd. has only managed to contract 90,000 labour hours for next year. (7 marks) b) Calculate Nano Ltd.'s profit based on the production plan in a). (3 marks) c) It was found that Nano Ltd. has already committed to a contract legally obligating it to supply 2100 units of product Y. Recalculate the production plan that will maximise profit according to this newly factor. (3 marks) d) Discuss the non-financial factors that should be considered by Nano Ltd. before adopting any of the suggested production plan. (7 marks) e) Discuss the benefits of using a marginal costing system in comparison to absorption costing system when making operational decisions
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