F2

[darkxangel]

A company has only 4000 labour hours available for production in the next period and the following information is available:
Product ————————————————Q——-R——-S
Maximum demand for next period (units)—500—-500—-500
Contribution per unit ($) ————————— 24—34——40
Labour hours per unit ———————————2—3———5
The company holds no inventories.
If the company plans production to maximise profits, which TWO of the following statements are correct in respect of next period’s production:
a) Produce no Q, 500 units of R and 500 units of S
b) Produce 500 units of Q, 500 units of R and 300 units of S
c) Max contribution will be 39,000
d) Max contribution will be 37,000

I need help with this question !

 

[ks136]

Contribution per labor hr:
Q=24/2= 12
R=34/3= 11.3
S=40/5=8

Ranking =Q,R,S
Total hours available= 4000
Allocated to-Q (500*2)=1000
Available= 3000
Allocated to R (500*3) =1500
Available =1500
Units that can be produced of S= 1500/5 = 300

Most feasible option :
Units
Q 500
R 500
S 300