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 80 70 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 35 35 Total unit cost ? ? Selling price per unit 375 400 Monthly demand in units 5500 4000 Direct working hours are required to create a single unit 2.5 3 Direct machine hours are required to create a single unit 3.75 5 In addition Production capacity - working hours per month 30000 Production capacity - machine hours per month 37500 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.
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