From the following particulars, find the most profitable product mix and prepare a statement of… 1 answer below »
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From the following particulars, find the most profitable product mix and prepare a statement of profitability of that product mix:
Product A
Product B
Product C
Units Budgeted to be Produced and Sold
1,800
3,000
1,200
Selling Price per unit (Rs.)
60
55
50
Direct Material Required per unit (kg)
5
3
4
Direct Labour per unit (hrs)
4
3
2
Variable Overheads (Rs.)
7
13
8
Fixed Overheads (Rs.)
10
10
10
Cost of Direct Material per kg (Rs.)
4
4
4
Direct Labour hour rate (Rs.)
2
2
2
Maximum Possible units of Sale
4,000
5,000
1,500
All the three products are produced from the same direct material using the same type of machines and labour. Direct labour which is the key factor is limited to 18,600 hours.
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