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Question 3.: CVP A company makes two products, the variable costs are as follows: The sale price of A is 14 and B is 11.
Question 3.: CVP A company makes two products, the variable costs are as follows: The sale price of A is 14 and B is 11. During the month of duly the availability of Direct Labour is limited to 5000 hours due to staff taking holidays. Sales demand is expected to be 3000 units of A and 5000 units of B. Monthly fixed costs are 20,000 and opening stocks are zero. Required: a) Calculate the deficiency in laboukhours for the month. [4 marks] b) Determine the priority ranking for production. [4 marks] c) Calculate the maximum profit that can be made next month [8 marks] d) Calculate the loss of profit due to this limiting factor and consider the maximum amount the company would be willing to pay per hour for agency staff. [9 marks]
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