Part 1: Smith Ltd Smith Ltd has three products all of which require the same pro

Question

Part 1: Smith Ltd Smith Ltd has three products all of which require the same production facilities. Financial data on the three products are as follows: Selling price per unit (E) Variable Cost per unit (E) Share of fixed overheads E per unit 140 80 E per unit 180 100 E per unit 240 90 20 20 20 Monthly demand in units (units) 90 100 80 Machine time per unit (hours) 5 10 15 The same machine is used to produce al three products and hence, fixed cost is not affected. Machine time is limited to 850 hours per month. Required With supported workings, show which combination of products to be produced to achieve the highest profit for the company (Total 5 marks)

Explanation / Answer

Part1

As per Chegg policy only first question can be solved.

A B C Selling Price Per Unit £140.00 £180.00 £240.00 Variable Cost Per Unit £80.00 £100.00 £90.00 Contribution per Unit £60.00 £80.00 £150.00 Machine Hour require per Unit           5.00         10.00         15.00 Contrunution per Machien Hour
( Cont. per Unit/Machine Hour require per Unit) £12.00 £8.00 £10.00 Rank I III II No. of Unit ( Demand) 90 100 80 No. of Machine Hour Require for demand Unit 450 1000 1200

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