P Ltd. manufactures and sells children’s toys of high quality over an extensive market utilizing the services of skilled artists who are paid at an average rate of Rs.15 per hour. The total number of skilled hours available in a year is only 14000. The details of planned production for 2008-09; estimated cost and unit selling prices are given below:

Product	Production	Direct	Direct	Fixed	Selling
[Toy]	Planned	Materials Per	Labour	Overheads	Price
	[Units]	Unit	Per Unit	Per Unit	Per Unit
		Rs.	Rs.	Rs.	Rs.
A	3000	20	10	15	70
B	4000	24	12	18	92
C	4000	32	12	18	95
D	3000	40	16	24	110
E	2400	60	20	30	180

Variable overheads costs amount to 50% of the direct labor cost. The company has estimated the following maximum and minimum demands for each product.

Particulars	A	B	C	D	E
Maximum – Units	5000	6000	6000	4000	4000
Minimum – Units	1000	1000	1000	500	500

You are required to work out profit as per the production plan of the company and also compute the optimum profit in the given situation.

Answer rating: 100% (QA)

Solution In the example the direct labour hour is the key factor or constraint The availability of the same is only 14000 labour hours and hence the p... View the full answer