XY Ltd. is manufacturing three household products, A, B and C and selling them in a...

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XY Ltd. is manufacturing three household products, A, B and C and selling them in a competitive market. Details of current demand, selling price and cost structure are given below. B 12,000 16 Particulars Expected Demand [units] Selling price per unit Rs. Variable cost per unit Direct materials Rs.10 per kg Direct labour Rs.1.5 per hour Variable overheads Fixed overheads per unit A 10, 000 20 6 3 2 Rs.5 4 3 1 Rs.4 20, 000 10 2 1.50 1.0 Rs.2 The company is frequently affected by acute scarcity of raw material and high labor turnover. During the next period, it is expected to have one of the following situations: I] Raw material available will be only 12 100 kg II] Direct labour hours available will be only 5000 hrs. III] It may be possible to increase sales of any one product by 25% without any additional fixed costs but by spending Rs.20, 000 on advertisement. There will be no shortage of materials or labor. Suggest the best production plan in each case and the resultant profit that the company would earn according to your suggestion. XY Ltd. is manufacturing three household products, A, B and C and selling them in a competitive market. Details of current demand, selling price and cost structure are given below. B 12,000 16 Particulars Expected Demand [units] Selling price per unit Rs. Variable cost per unit Direct materials Rs.10 per kg Direct labour Rs.1.5 per hour Variable overheads Fixed overheads per unit A 10, 000 20 6 3 2 Rs.5 4 3 1 Rs.4 20, 000 10 2 1.50 1.0 Rs.2 The company is frequently affected by acute scarcity of raw material and high labor turnover. During the next period, it is expected to have one of the following situations: I] Raw material available will be only 12 100 kg II] Direct labour hours available will be only 5000 hrs. III] It may be possible to increase sales of any one product by 25% without any additional fixed costs but by spending Rs.20, 000 on advertisement. There will be no shortage of materials or labor. Suggest the best production plan in each case and the resultant profit that the company would earn according to your suggestion.

Answer rating: 100% (QA)

Solution Solution The following statement is prepared to compute the contribution per unit and for deciding best production plan in each case There are limiting factors like raw material and direct la... View the full answer