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Question 3 (Total 10 marks) Fuchsia plc manufactures three products: F, G and H, using the same direct material and direct labour. The anticipated demand
Question 3 (Total 10 marks) Fuchsia plc manufactures three products: F, G and H, using the same direct material and direct labour. The anticipated demand for each of these products is 4,000 units per quarter. The direct material costs 5 per kg and direct labour is 7 per hour. The following budgeted details are relevant: Selling price per unit Direct material per unit Direct labour per unit Product F 35 1.8kg 1.5hours Product G 40 2.0kg 1.5hours Product H 45 3.2kg 0.75hours Note: Direct material and direct labor are the only variable costs. The suppliers of the direct material have informed Fuchsia plc that the material will be limited in the next quarter to 20,000kg. Required a) Calculate the total contribution resulting from (a) (4 marks) b) Calculate the number of units for products F, G and H, to maximise profit, inaccordance with the finance director. (4 marks) c) Calculate the total contribution resulting from (c) (2 marks) (Total 10 marks)
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