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That's all questions I have. Pls explain for me. JDR Ltd manufactures four products using the same machinery. The following details relate to its products:
That's all questions I have. Pls explain for me.
JDR Ltd manufactures four products using the same machinery. The following details relate to its products: Product C per unit 45 Selling price Direct material Direct labour Variable overhead Fixed overhead * Profit Labour hours Machine hours Product A per unit 28 5 4 3 8 8 1 4 Units 200 Product B per unit 30 6 4 3 8 9 1 3 Units 8 8 6 16 7 2 4 Units 250 Product D per unit 42 6 8 6 16 6 2 5 Units 100 Maximum demand per week 180 *Absorbed based on budgeted labour hours of 1000 per week. There is a maximum of 2000 machine hours available per week. Requirement: (a) Determine the production plan which will maximize the weekly profit of JDR Ltd and prepare a profit statement showing the profit your plan will yield. (b) The marketing director of JDR Ltd is concerned at the company's inability to meet the quantity demanded by its customers. One consideration is to overcome this is to increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50% above normal labour rates, and variable overhead costs would be expected to increase in proportion to labour costs. Requirement: Critically evaluate this strategy and, as management accountant, prepare a discussion document for the marketing director, stating your findings (quantitative and qualitative) as to the expected increase in contribution (if any) and any issues that could arise and would need to be resolved. (c) Where production capacity (machine hours) is the limiting factor', critically explain ways (in addition to overtime working) in which management can increase it without having to acquire more plant and machineryStep by Step Solution
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