Some market research has been conducted and found potential market demand for the three products (based upon the prices in the above table) to be as follows: Product X: 25,000 units; Product Y: 30,000 units and Product Z: 35,000 units. Assume it is possible to change production quantities of the products easily and selling prices and costs per unit are unaffected by changes in production volume. Using variable (marginal) costing methods and the information provided. 

Calculate a revised production plan to maximise the profits of Squirrels Ltd based on the results of the market research. 

Machine hours have to be restricted to the original level (as specified above in the question.

Ensure you clearly show how much of each product is produced and the profit under this revised production plan. Show all your workings. Comment briefly on your results.

Answer rating: 100% (QA)

To maximize the profits of Squirrels Ltd we need to determine the optimal production quantities for each product based on the given market demand and ... View the full answer