Question
Nirit Ltd. is a company that manufactures and sells both products A and B. The company can purchase raw materials without restriction. The following are
Nirit Ltd. is a company that manufactures and sells both products A and B. The company can purchase raw materials without restriction. | |||
The following are data regarding production: | |||
data | A | B | |
Cost of raw material per unit in NIS | 95 | 72 | |
Direct labor cost per unit in NIS - per machine hours | ? | ? | |
Indirect cost varies per unit in NIS - per machine hours | ? | ? | |
Fixed indirect costs per unit in NIS | 25 | 25 | |
Total unit cost | ? | ? | |
Selling price per unit | 350 | 400 | |
Monthly demand in units | 7500 | 4500 | |
Direct working hours are required to create a single unit | 4 | 5 | |
Direct machine hours are required to create a single unit | 3 | 3.5 | |
In addition | |||
Production capacity - working hours per month | 50000 | ||
Production capacity - machine hours per month | 40000 | ||
The cost of a direct hour of work is NIS | 22 | ||
Indirect cost varies in NIS per machine hour | 6 | ||
The product mix that will bring maximum profit is: | |||
From product A we will produce and sell 5,500 units, and from product B we will produce and sell 3,500 units. | |||
| |||
From product A we will produce and sell 5,500 units, and from product B we will produce and sell 3,375 units. | |||
| |||
From product A we will produce and sell 4,500 units, and from product B we will produce and sell 3,000 units. | |||
| |||
None of the other answers are correct | |||
| |||
From product A we will produce and sell 4,500 units, and from product B we will produce and sell 4,000 units. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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