WB Ltd. produces two products - W and B. Both are components that have a wide...
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WB Ltd. produces two products - W and B. Both are components that have a wide range of industrial applications. The unit selling price of W is £128 and that of B is £95 currently. The resource requirements for producing one unit of each of the two products are: Materials Labour hours Machine hours Absorbed fixed costs £20 21.8 hours 4 hours 7.5 hours 3 hours £15 W B 8kg 14.25kg Materials cost £3 per kg and labour costs £3.20 per hour. Annual fixed costs are expected to be £12,000, and are absorbed on the basis of outputs of last year. During the coming year the company will have the following resources available to it: 4,000 kgs of materials, 6,000 labour hours, and 1,200 machine hours. Required: a). Use graphical linear programming to determine the number of units of product W and B that should be produced in the coming period in order to maximize profit (apply the nearest whole number of units). And also calculate annual net profit that will be earned. b). State the implications of your answer in a), in terms of the decisions that will have to be made by WB Ltd. with respect to production during the period after taking into account all relevant costs. WB Ltd. produces two products - W and B. Both are components that have a wide range of industrial applications. The unit selling price of W is £128 and that of B is £95 currently. The resource requirements for producing one unit of each of the two products are: Materials Labour hours Machine hours Absorbed fixed costs £20 21.8 hours 4 hours 7.5 hours 3 hours £15 W B 8kg 14.25kg Materials cost £3 per kg and labour costs £3.20 per hour. Annual fixed costs are expected to be £12,000, and are absorbed on the basis of outputs of last year. During the coming year the company will have the following resources available to it: 4,000 kgs of materials, 6,000 labour hours, and 1,200 machine hours. Required: a). Use graphical linear programming to determine the number of units of product W and B that should be produced in the coming period in order to maximize profit (apply the nearest whole number of units). And also calculate annual net profit that will be earned. b). State the implications of your answer in a), in terms of the decisions that will have to be made by WB Ltd. with respect to production during the period after taking into account all relevant costs.
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Related Book For
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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