Question
X Y Ltd. Is manufacturing three household products A,B and C, selling them in a competition market. Details of current demand ,selling price and cost
X Y Ltd. Is manufacturing three household products A,B and C, selling them in a competition market. Details of current demand ,selling price and cost structure are given below:
| A | B | C |
Expected demand (units) | 10,000 | 12,000 | 20,000 |
Selling price per unit (Rs) | 20 | 16 | 10 |
Variable cost per unit (Rs) |
|
|
|
Direct materials (Rs. 10/kg) | 6 | 4 | 2 |
Direct labour (Rs. 15/hr) | 3 | 3 | 1.50 |
Variable overheads | 2 | 1 | 1 |
Fixed overhead per unit (Rs) | 5 | 4 | 2 |
The company is frequently affected by acute scarcity of raw material and high labour turnover. During the next period, it is expected to have one of the following situations: Raw material available will be only 12,100 kg.
Suggest the best production plan in each case and the resultant profit that the company would earn according to your suggestion.
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