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Wingko Ltd produces three products: A, B and C. All three products use the same direct material, namely Batu. Unit data for the three
Wingko Ltd produces three products: A, B and C. All three products use the same direct material, namely Batu. Unit data for the three products are: Product A B C Selling price $252 $168 $210 Variable costs Direct materials $72 $45 $27 Labour and other costs $84 $81 $120 Quantity of Batu in kgs 8 5 3 The demand for the products far exceeds the direct materials available to produce the products. Batu costs $9 per kilogram, and only a maximum of 5,000 kilograms is available each month. Wingko Ltd. must produce a minimum of 200 units of each product. Required: (a) How many units of product A, B and C should Wingko produce? (25 marks) (b) What is the maximum amount Wingko would be willing to pay for another 1,200 (25 marks) kilograms of Batu? Assuming that fixed costs are covered by the minimum product mix.
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