Question
Woodie Ltd makes two types of wood floors, regular and deluxe. The following data concerns the two products: RegularDeluxe Sales price (per square metre) $16
Woodie Ltd makes two types of wood floors, regular and deluxe. The following data concerns the two products:
RegularDeluxe
| Sales price (per square metre) | $16 | $25 |
| Variable cost | $10 | $15 |
| Labour (hours per square metre) | 0.15 | 0.20 |
| Maximum sales (units per week) | 30,000 | 8,000 |
There are 4,600 hours of labour time available for production. Fixed production costs total $600,000 and all selling costs are fixed.
Required:
What is the optimal production level in number of square metres for each product?
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Financial and Managerial Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
12th edition
978-1133952428, 1285078578, 1133952429, 978-1285078571
