ABC Ltd manufactures three products A, B and C using the same machine which has an annual working capacity of 70,000 hours. The details of costs and selling price of these products are as follows:
|
A (Rs.) |
B (Rs.) |
C (Rs.) |
|
|
Sales price per unit |
400 |
308 |
448 |
|
Variable Cost per unit: |
|||
|
Direct Material |
140 |
80 |
160 |
|
Direct Wages (@ Rs. 16 per machine hour) |
96 |
64 |
112 |
|
Variable Overheads |
72 |
80 |
84 |
|
Total Variable Cost per unit |
308 |
224 |
356 |
|
Maximum Market Demand (in units) |
6,000 |
5,000 |
10,000 |
Total Fixed Cost of the company amount to Rs. 3,50,000 per annum. The company could purchase similar products from an assembly centre at the following costs:
|
A |
Rs. 350 per unit |
|
B |
Rs. 280 per unit |
|
C |
Rs. 400 per unit |
You are required to recommend which products the company should manufacture and purchase in what quantity to maximize the company profit and also compute the overall profit of the company as per your recommended optimum production mix.