A] The following particulars are extracted from the records of a company.
|
Particulars |
Product A |
Product B |
|
Sale price per unit |
Rs.100 |
Rs.120 |
|
Consumption of material |
2 kg |
3 kg |
|
Material cost |
Rs.10 |
Rs.15 |
|
Direct labour cost |
15 |
10 |
|
Direct expenses |
5 |
6 |
|
Machine hours used |
3 |
2 |
|
Fixed overheads per unit |
Rs.5 |
Rs.10 |
|
Variable overheads per unit |
15 |
20 |
Direct labour per hour is Rs.5. Comment on the profitability of each product [both use same raw material] when, I] total sales potential in units is limited II] total sales potential in value is limited III] raw material is in short supply IV} production capacity [in terms of machine hours] is limited.
B] Assuming raw material as the key factor, availability of which is 10,000 kg and maximum sales potential of each product being 3500 units, find out the product mix which will yield maximum profits.