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The following information relates to Questions A7 to A8 Great Britain Motors Ltd manufactures three different types of cars: compact cars, saloons, and SUVs. The
The following information relates to Questions A7 to A8 Great Britain Motors Ltd manufactures three different types of cars: compact cars, saloons, and SUVs. The demand for each type is limited to 1,000 cars per month, and the maximum capacity of the company's assembly line is 20,000 hours per month. Total fixed costs are 3,000,000 per month and absorbed on the basis of assembly hours. Information of the three types is as follows: Product type Fixed costs Selling price per unit per unit Compact cars Saloons SUVs Assembly Variable hours costs per unit 11 7,530 14 10,270 18 13,920 1,650 2,100 2,700 16,000 20,000 24,000 Question A7 (REQUIRED) Calculate the contribution of compact cars per assembly hour. (1 mark) Question A8 (REQUIRED) Calculate the maximum monthly profit which can be achieved given the constraints. (2 marks)
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