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Nut 8: Bolt Ltd has asked for your help in determining economical sales and production mix of their products for 20x2. The company manufactures four

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Nut 8: Bolt Ltd has asked for your help in determining economical sales and production mix of their products for 20x2. The company manufactures four products, namely nuts, screws, washers and bolts. It manufactures each of these in batches of 1,000 and the sale of one product is not dependent on the sale of another (i.e. nuts and bolts are sold separately!) The company's sales' department provides the following data: Estimated Selling price demand for 20x2 per batch in batches 2. The labour rate is 4.00 per hour and is expected to continue without change in 20x2. The plant has an effective capacity of 80,000 labour hours per year on a single shift basis. Present equipment can product all of the products. There is no shortage of material. 3. The fixed costs for 20X2 will be $160,000. Required 1. With an effective capacity of 80,000 hours, can Nut & Bolt Ltd. Produce sufficient numbers of their products to meet demand? 2. What profit would this achieve? 3. If the capacity available were only 65,000 labour hours, which products should be produced and in what quantities in order to maximise profit? 4. What profit would this achieve? 5. If the company were able to make up the shortfall in labour hours hours by paying more, what is the maximum hourly rate the company would be willing to pay to achieve this? What extra profit would the company make if it paid this maximum hourly rate and so managed to satisfy the total demand from the market

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