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Question 3 (14 Marks) Classic Decorations makes three decorative copper products: pot racks, ice buckets, and candlesticks. These products are made by robots, which
Question 3 (14 Marks) Classic Decorations makes three decorative copper products: pot racks, ice buckets, and candlesticks. These products are made by robots, which are programmed to form the desired product. It takes one robot hour to make each pot rack, one-half hour to make each ice bucket, and one-fourth hour to make each candlestick. The company has 43,200 robot hours per year available for production. Analysis reveals the following expected revenue and costs per unit: Pot Racks Ice Buckets Candlesticks Selling price $110 $80 $40 Variable costs: Direct materials $ 22 $16 $ 9 Direct labour 7 10 5 Variable overhead Variable selling 22 22 12 6 3 16 8 Fixed costs: Factory 10 15 7 Required: a. If the company can sell an unlimited amount of any of the products, how many of each product. should it make? (5 marks) b. How many units of each product must the company make if it has a policy of devoting no more than 60% of its available robot capacity to any one product and at least 10% to every product? (9 marks)
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