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Question 6. Cat ltd. makes two products, the Alan and the Cats. The selling price and resource requirements of both the products is as
Question 6. Cat ltd. makes two products, the Alan and the Cats. The selling price and resource requirements of both the products is as follows: Products (values per unit) Selling Price Direct Material ($4 per kg) Direct Labour ($10 per hour) Fixed overheads absorbed Profit per Unit Alan $80 $20 $30 $10 $20 Cats $120 $28 $40 $20 $30 Market analysis shows that the maximum demand for products Alan and Cats during the coming month of November will be 600 units and 1,200 units respectively. At a recent meeting of the purchasing and production managers to discuss the company's production plans for December 2020, the following resource availability for December, is identified: Direct material 12,000 kg Direct labour 6,000 hours Requirement: a) Identify the limiting factor(s) in the above-mentioned scenario (LO3. BT Level: Apply) (5 Marks) b) Prepare an optimum production plan showing quantities of the products ONLY that can be produced with the resources available. Show all workings. (LO4. BT Level: Evaluate) (8 Marks) What will be the total profit maximizing amounts under the optimum production plan. (LO3. BT (6 Marks) Level: Apply)
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