43. G Limited, manufacturer of superior garden ornaments, is preparing its production budget for the coming period.
Question:
43. G Limited, manufacturer of superior garden ornaments, is preparing its production budget for the coming period. The company makes four types of ornaments, the data for which are as follows:
Fixed overhead amounts to Rs 15,000 per period. Each type of labour is paid Rs 5 per hour but because of the skills involved, an employee of one type cannot be used for work normally done by another type. The maximum hours available of each type are:
The marketing department judges that, at the present selling prices, the demand for the products is likely to be:
You are required
(a) to calculate the product mix that will maximise the profit, and the amount of the profit;
(b) to determine whether it would be worth while paying Type 1 Labour for overtime working at time and a half and, if so, to calculate the extra profit for each 1,000 hours of overtime;
(c) to comment on the principles used to find the optimum product mix in part (a), pointing out any possible limitations;
(
d) to explain how a computer could assist in providing a solution for the data shown above.
Step by Step Answer:
