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Please Help - You can ignore Part a Taybridge plc makes four products using the same machine. The following details relate to its products Product
Please Help - You can ignore Part a
Taybridge plc makes four products using the same machine. The following details relate to its products Product A Product B Product C Product D Selling price Direct material Direct labour Variable overhead Fixed overhead Profit 28 30 45 42 16 16 0.25 0.25 0.25 0.25 Machine Maximum demand 200 180 250 100 Fixed costs are 8,000 per week. There is a maximum of 2,000 machine hours available per week. Required: (a)Determine the production plan that will maximise the weekly profit of Taybridge plc, and prepare a profit statement showing the profit your plan will yield (b) The company's marketing director is concerned at the inability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this (0) Overtime working. Unlimited machine hours would be available during overtime periods. Overtime would be paid at 50 per cent above normal rates, and variable overhead costs would increase in proportion to labour costs (i) Outsource the manufacture of Product B to an overseas supplier at a cost of 19 per unit, including transport costs. In addition a repackaging cost of E1 per unit would be incurred Evaluate each of the two alternatives and prepare a report for the marketing director stating your reasons (quantitative and qualitative) as to which strategy, if either, should be adoptedStep by Step Solution
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