Question
Roll and Maul Ltd. is having serious problems in obtaining supplies of raw material M, which is used in the four products that it makes.
Roll and Maul Ltd. is having serious problems in obtaining supplies of raw material M, which is used in the four products that it makes. The company has current stocks of M amounting to 15000kilos, which costs 60000. Expected demand, selling prices and costs for each of the four products are as follows:
Product | Kilos of material M per unit of product | Labour and material overhead cost per unit | Sales price per unit | Budgeted sales demand in the period |
KG | $ | $ | Units | |
W | 0.70 | 15 | 22 | 8000 |
X | 0.50 | 8 | 14 | 7200 |
Y | 1.00 | 12 | 23 | 12000 |
Z | 1.50 | 10 | 22 | 10000 |
Question:
If Roll and Maul can obtain supplies of material M, but at a price of 9.50 per kilo, how many kilos the company should purchase in the period in order to maximize profits? (It can be assumed that the price of the material will subsequently fall to 4 per kilo in future periods). A. None B. 600 kilos C. 6200 kilos D. 21200 kilos
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