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Q1 Matello Toy Company manufactures a line of Barbie models. Demand for the Barbie Matello is increasing, and the management of Matello Toy is attempting
Q1 Matello Toy Company manufactures a line of Barbie models. Demand for the Barbie Matello is increasing, and the management of Matello Toy is attempting to determine an optimal sales and production mix for the coming year. They have asked for your assistance. The company has provided the following information: Smagulova Nana Mbili Kyla Lea Diedre Selling price per unit (RM) 52.00 40.00 48.00 50.00 55.00 Direct materials cost (RM) 15.30 11.50 16.50 15.00 15.00 Direct labour cost (RM) 13.20 12.00 15.00 14.00 15.00 Variable factory overhead cost (RM) 6.50 5.50 5.50 6.00 5.00 Estimated demand next year (units) 30,000 22,000 15,000 20,000 35,000 The following additional information is available: 1. The company's plant has a capacity of 180,000 direct labour hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. 2. The direct labour rate is RM8.00 per hour; this rate is expected to remain unchanged during the coming year. 3. All of the company's non-manufacturing costs are fixed. 4. Fixed cost total RM500,000 per year. 5. The company's present inventory of finished products is insignificant, and can be ignored. Required: 1. (a) Determine how many units of products should be manufactured in order to maximum profit. 2. (b) Based on your answer in part (a), calculate profit for the year. 3. (c) State which product/(s) should be reduced or discarded
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