XYZ 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 :

A BC

Expected demand (units)10,00012,00020,000

Selling price per unit (Rs.)201610

Variable cost per unit(Rs.)

Direct materials (Rs. 10/kg)642

Direct labor (Rs. 15/hr.)331.50

Variable overheads211

Fixed overheads per unit (Rs.)542

The company is frequently affected by acute scarcity of rawmaterial and high labourturnover. During the next period, it is expected to have one of the following situations :

(a)Raw materials available will be only 12,100 kg.

(b)Direct labour hours available will be only 5,000 hours

(c)It may be possible to increase sales of any one product by 25%without any additionalfixed costs but by spending Rs. 20,000 on advertisement. There will be no shortage of materials or labour.

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)

Lets analyze each situation and suggest the best production plan along with the resultant profit for XYZ Ltd a Raw materials available will be only 12100 kg We need to determine the production plan th... View the full answer