Sao Limited makes three products, all of which use the same machine, which is available for 60,000 hours per period.

The standard costs of the product, per unit, are

Product X Product Y Product Z

Direct materials 100 70 90

Direct labour

Machinists (6 per hour)

30 18 54

Assemblers (6 per hour)

36 40 42

Selling price per unit

215 147 220

Maximum demand (units)

3500 2000 5500

Fixed costs are 250,000 per period

Required:

a) Calculate the deficiency in machine hours for the next period.

(5 marks)

b) Determine the production plan that will maximise Sao Ltd.s profit for the next period.

(14 marks)

c) Calculate the profit that will result from your recommended production plan.