Question: Question One Linux Optical Products Ltd manufactures highly specialised optical equipment for surveillance purposes. There is a high demand for their products, but the company
Question One Linux Optical Products Ltd manufactures highly specialised optical equipment for surveillance purposes. There is a high demand for their products, but the company operates under the constraint of a shortage of specialist labour which is available at 700 hours a year. The production team is currently formulating a production plan for the company's two principal products, G and H, for 2021 and wishes to determine the optimal product mix. Details of the two products are as follows: Product G Product H Selling Price 1,570 2,060 Variable cost of metals, lenses etc. 462 772 Specialist labour costs @ 20.00 per hour 80 100 Other variable labour costs 265 306 Annual demand 135 units 93 units (a) Calculate the contribution per unit of limiting factor for products G and H. [10 marks] (b) Advise the production team on the plan they should follow for 2021. [10 marks)
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