Doomed Ltd manufactures a variety of insect repellents. Their two best selling products is the Mosquito...
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Doomed Ltd manufactures a variety of insect repellents. Their two best selling products is the Mosquito Room Spray and the Xtreme Flying Insects Spray Any fraction of a millitre can be produced for either product but sales are made in 750 ml bottles only. The profit per bottle of room spray is calculated as follows: Sales Cost of sales Pesticide A chemicals @R 3 per mi Pesticide B chemicals @R2 per ml. Labour R12 per hour Manufacturing overhead (50% variable, 50% fixed) Profit Mosquito Room Spray R60,00 12.00 16.00 12.00 16.00 4.00 Xtreme Flying Insects Spray R50.00 18:00 12.00 6.00 8.00 6.00 The total available manufacturing capacity for an average month is 900 hours of labour. If required, more workers can be hired at any point in time. Pesticide A & B contains a high volume of morphine and is restricted to a supply of 15 000 ml of persticide A and 20 000ml of pesticide B per month. Fixed costs have been apportioned to the two products in accordance with the instructions of the managing director. Total budgeted fixed costs are R10 000 per month. According to the marketing manager, the sales demand of Mosquito Room spray will be limited to 2 000 bottles and Xtreme Flying Insect spray to 1 500 bottles. REQUIRED: 6.1 Determine the maximum profit that Doomed Ltd will make in a month if the optimal amount of Mosquito and Xtreme Flying Insect Spray bottles is sold. 6.2 Briefly explain the significance and meaning of shadow prices of resources. Another manufacturer of insect repellents Targetto, have excess supply of Pesticide A & B and has offered to manufacture and supply Doomed Ltd with Mosquito Room Spray Targetto will supply the Mosquito Room Spray at a price of R 48. 6.3 Comment on the proposal to buy the Mosquito Spray from an outside supplier by listing all the qualitative factors that need to be considered. Doomed Ltd manufactures a variety of insect repellents. Their two best selling products is the Mosquito Room Spray and the Xtreme Flying Insects Spray Any fraction of a millitre can be produced for either product but sales are made in 750 ml bottles only. The profit per bottle of room spray is calculated as follows: Sales Cost of sales Pesticide A chemicals @R 3 per mi Pesticide B chemicals @R2 per ml. Labour R12 per hour Manufacturing overhead (50% variable, 50% fixed) Profit Mosquito Room Spray R60,00 12.00 16.00 12.00 16.00 4.00 Xtreme Flying Insects Spray R50.00 18:00 12.00 6.00 8.00 6.00 The total available manufacturing capacity for an average month is 900 hours of labour. If required, more workers can be hired at any point in time. Pesticide A & B contains a high volume of morphine and is restricted to a supply of 15 000 ml of persticide A and 20 000ml of pesticide B per month. Fixed costs have been apportioned to the two products in accordance with the instructions of the managing director. Total budgeted fixed costs are R10 000 per month. According to the marketing manager, the sales demand of Mosquito Room spray will be limited to 2 000 bottles and Xtreme Flying Insect spray to 1 500 bottles. REQUIRED: 6.1 Determine the maximum profit that Doomed Ltd will make in a month if the optimal amount of Mosquito and Xtreme Flying Insect Spray bottles is sold. 6.2 Briefly explain the significance and meaning of shadow prices of resources. Another manufacturer of insect repellents Targetto, have excess supply of Pesticide A & B and has offered to manufacture and supply Doomed Ltd with Mosquito Room Spray Targetto will supply the Mosquito Room Spray at a price of R 48. 6.3 Comment on the proposal to buy the Mosquito Spray from an outside supplier by listing all the qualitative factors that need to be considered.
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To determine the maximum profit that Doomed Ltd will make in a month we need to calculate the profit for each product and then determine the optimal quantity of each product to produce and sell Lets c... View the full answer
Related Book For
Statistics For Business And Economics
ISBN: 9780321826237
12th Edition
Authors: James T. McClave, P. George Benson, Terry T Sincich
Posted Date:
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