Readymix Ltd manufactures three products: Product RR, Product DD and Product MM. The contribution per unit...
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Readymix Ltd manufactures three products: Product RR, Product DD and Product MM. The contribution per unit of the respective products is as follows: Contribution per unit Product RR £420 Product DD £320 Product MM £620 The manufacture of these products involves two processes: Process Ready and Process Mix. The processing time requirements of each product (in hours) are as follows: Product MM Process Ready Process Mix Product RR b) 25 35 Product DD 50 40 40 55 The monthly processing time of Process Ready and Process Mix is limited to 50,000 hours and 80,000 hours respectively. The sales of Product RR are limited to 900 units per month due to regulatory restrictions. The objective of the company is to maximise contribution. Required: a) Using the simplex method, determine the optimal production plan. You should show and clearly explain all workings. Your answer should be rounded to 3 decimal places. New regulations stipulate that Readymix Ltd will be allowed to sell an additional 800 units of Product RR per month provided that a levy of £25 is paid for every additional unit sold. The company is confident that there will be demand for the additional units of Product RR. Advise Readymix Ltd whether the production of the additional 800 units of Product RR per month should be undertaken. c) A supplier has informed Readymix Ltd that it will be increasing its material prices. As a result, the variable cost of Product MM will in ase by £60 per unit. Assess the impact of this change in variable cost on the monthly total contribution of Readymix Ltd. Readymix Ltd manufactures three products: Product RR, Product DD and Product MM. The contribution per unit of the respective products is as follows: Contribution per unit Product RR £420 Product DD £320 Product MM £620 The manufacture of these products involves two processes: Process Ready and Process Mix. The processing time requirements of each product (in hours) are as follows: Product MM Process Ready Process Mix Product RR b) 25 35 Product DD 50 40 40 55 The monthly processing time of Process Ready and Process Mix is limited to 50,000 hours and 80,000 hours respectively. The sales of Product RR are limited to 900 units per month due to regulatory restrictions. The objective of the company is to maximise contribution. Required: a) Using the simplex method, determine the optimal production plan. You should show and clearly explain all workings. Your answer should be rounded to 3 decimal places. New regulations stipulate that Readymix Ltd will be allowed to sell an additional 800 units of Product RR per month provided that a levy of £25 is paid for every additional unit sold. The company is confident that there will be demand for the additional units of Product RR. Advise Readymix Ltd whether the production of the additional 800 units of Product RR per month should be undertaken. c) A supplier has informed Readymix Ltd that it will be increasing its material prices. As a result, the variable cost of Product MM will in ase by £60 per unit. Assess the impact of this change in variable cost on the monthly total contribution of Readymix Ltd.
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Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
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