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QUESTION 1 (25 MARKS) A company makes two products namely A and B. Details of the products are as follows: Sales Less: Total variable
QUESTION 1 (25 MARKS) A company makes two products namely A and B. Details of the products are as follows: Sales Less: Total variable costs Contribution per unit A B RM RM 60 40 36 20 24 20 Product A takes 6 hours to complete while product B needs only 4 hours. Both products are using the similar type of labour which happens to be in short supply. The existing demand for A is 600 units whereas B is 400 units. The available hour of direct labour in hand is limited to 2,800 hours only. Fixed production overhead and other fixed costs are RM3,500 and RM2,000 respectively. Required: Calculate the contribution to profits for the optimal component mix. (25 marks)
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