Question
Part b Skippy Ltd manufactures three models of running shoes: Primo, Diva and Super. The management are planning next year's production and want to
Part b Skippy Ltd manufactures three models of running shoes: Primo, Diva and Super. The management are planning next year's production and want to ensure the most profitable mix of models is produced. The following table shows the selling price and variable costs per unit for each model: Selling price Direct materials Direct labour Primo (E) Diva () Super (E) 100 150 240 30 40 50 30 50 120 10 25 24 Direct expenses Management are aware that the supply of direct labour (all paid at 10 per hour) will be limited next year. Based on the assumption that Skippy Ltd seek to maximise profit, rank the three products in order of production priority. (7 marks) Outline three additional factors that management should take into consideration regarding prioritising the production of these products. (3 marks) (Total for Question 4: 20 marks) (Continued...) Part b Skippy Ltd manufactures three models of running shoes: Primo, Diva and Super. The management are planning next year's production and want to ensure the most profitable mix of models is produced. The following table shows the selling price and variable costs per unit for each model: Selling price Direct materials Direct labour Primo (E) Diva () Super (E) 100 150 240 30 40 50 30 50 120 10 25 24 Direct expenses Management are aware that the supply of direct labour (all paid at 10 per hour) will be limited next year. Based on the assumption that Skippy Ltd seek to maximise profit, rank the three products in order of production priority. (7 marks) Outline three additional factors that management should take into consideration regarding prioritising the production of these products. (3 marks) (Total for Question 4: 20 marks) (Continued...)
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