Question
PDR Co. manufactures 4 products using the same machinery. The following details relate to its 4 products. Product A Product B Product C Product D
PDR Co. manufactures 4 products using the same machinery. The following details relate to its 4 products.
| Product A | Product B | Product C | Product D |
| $ per unit | $ per unit | $ per unit | $ per unit |
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Selling price | 28 | 30 | 45 | 42 |
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Direct material | 5 | 6 | 8 | 6 |
Direct labour | 4 | 4 | 8 | 8 |
Variable overhead | 3 | 3 | 6 | 6 |
Fixed overhead * | 8 | 8 | 16 | 16 |
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Profit | 8 | 9 | 7 | 6 |
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Labour hrs.per unit | 1 | 1 | 2 | 2 |
Machine hrs.per unit | 4 | 3 | 4 | 5 |
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| Units | Units | Units | Units |
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Maximum weekly demand | 200 | 180 | 250 | 100 |
*Absorbed based on budgeted labour hours of 1,000 per week.
There is a maximum of 2,000 machine hours available per week
Required:
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Determine the production plan which would maximise the weekly profit of PDR Co
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Prepare a profit statement showing the profit your plan would yield
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