In a factory producing two different kinds of articles, the limiting factor is the availability of labour. From the following information for the factory for 1994, show which product is more profitable
|
Product A, cost per unit (Rs) |
Product B, cost per unit (Rs) |
|
|
Materials |
5.00 |
5.00 |
|
Labour: |
||
|
6 hours at 0.50 |
3.00 |
1.50 |
|
3 hours at 0.50 |
||
|
Overheads: |
||
|
Fixed (50% of labour) |
1.50 |
0.75 |
|
Variable |
1.50 |
1.50 |
|
Total cost |
11.00 |
8.75 |
|
Selling price |
14.00 |
11.00 |
|
Profit |
3.00 |
2.25 |
|
Total production for the month |
700 units |
800 units |
Maximum capacity per month = 4,800 hours. Also, give proof in support of your answer.