Type EXAMPLE 2.6-38 (Product Mix Problem) WELLTYPE manufacturing company produces three types of typewriters. All the three models are required to be machined first and then assembled. The time required for various models is as follows: Manual Electronic Deluxe electronic typewriter typewriter typewriter Machine time 15 12 14 (hours) Assembly time 3 5 (hours) The total available machine time and assembly time is 3,000 hours and 1,200 hours respectively. The data regarding the selling price and variable costs for the three types are: Type Manual Electronic Deluxe electronic Selling price ) 4.100 7,500 14,600 Labour, material and other variable 2,500 4,500 9,000 costs) The company sells all the three types on credit basis, but will collect the amounts on the first of next month. The labour, material and other variable expenses will have to be paid in cash. This company has taken a loan of 40,000 from a Cooperative Bank and this company will have to repay it to the bank on 1st April, 1993. The TNC Bank from whom this company has borrowed 360,000 has expressed its approval to renew the loan. The balance sheet of this company as on 31.3.1993 is as follows: Liabilities Assets Equity share capital 1.50,000 Land 90,000 Capital reserve 15.000 Building 70,000 General reserve 1,10,000 plant and machinery 1,00,000 Profit and loss account 25,000 Furniture and fixures 15,000 Long term loan 1,00,000 Vehicles 30,000 Loan from 7'NC Bank 60,000 Inventory 5,000 Loan from Cooperative Bank 40,000 Receivables 50,000 Cash 1,40,000 Total 5,00,000 Total 5,00,000 The company will have to pay a sum of 10,000 towards the salary of top management executives and other fixed overheads for the month. Interest on long-term loans is to be paid every month at 24% per annum. Interest on loans from TNC and Cooperative Banks may be taken to be * 1.200 for the month. Also this company has promised to deliver 2 manual typewriters and 8 deluxe-electronic typewriters to one of its valued customers next month. f22