| Profit Maximisation - Exercise 3.22 | Unnamed: 1 | Unnamed: 2 | Unnamed: 3 | SOLUTION |
|---|---|---|---|---|
| (a) | Jumpers | Pashminas | Total | |
| Units demanded | 2500 | 6000 | ||
| Labour hours per unit | 2 | 1 | ||
| Total labour hours required | 5000 | 6000 | 11000 | |
| Labour hours available | 10000 | |||
| Shortage of labour hours | 1000 | |||
| (b) | The limiting factor is | Labour Hours | ||
| (c) | Contribution per unit | 20 | 12 | |
| Labour hours per unit | 2 | 1 | ||
| Contribution per labour hour | 10 | 12 | ||
| (d) | Order of priority | first | Pashminas | |
| second | Jumpers | |||
| Reason | Pashminas have a higher | |||
| contribution per labour hour, | ||||
| which is the limiting factor. | ||||
| The demand for Pashminas must | ||||
| therefore be met if possible. | ||||
| (e) | Labour hours available for production | 4000 | 6000 | 10000 |
| (f) | Contribution per labour hour | 10 | 12 | |
| (From (c) above) | ||||
| Total contribution | 40000 | 72000 | 112000 | |
| (g) | Total fixed costs | 40000 | ||
| Profit | 72000 | |||
| (h) | Scarves and rugs made | 2000 | 6000 |