Question
QUESTION 1 15 Marks Boyds Banners Pty Ltd makes and sells two types of banners, large and small for advertising agencies. Fixed costs per month
QUESTION 1 15 Marks Boyds Banners Pty Ltd makes and sells two types of banners, large and small for advertising agencies. Fixed costs per month are $45,000. Selling prices and variable cost per unit are:
Product Type | Small | Large |
Sales Price | $300 | $500 |
Variable costs | $175 | $300 |
Packaging | $30 | $50 |
Three quarters of the sales require small banners to be manufactured. The graphic machine is required by both the small banners and the large banners for printing. The machine has a capacity of 160 hours per month. The small banners take 15 minutes of machine time per unit while the large requires 45 minutes of machine time per unit. Required: a) Calculate the unit contribution margin for each product? b) What is the optimum production schedule to maximise monthly profits (to the nearest whole number)? c) In addition to machine time, 200 skilled labour hours are available per month, small requires 30 minutes per unit and large also requires 30 per unit. Taking into account of both machine and labour constraints, what is the optimum production schedule?
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