| Profit Maximisation - Exercise 3.23 | Unnamed: 1 | Unnamed: 2 | Unnamed: 3 | Unnamed: 4 | SOLUTION |
|---|---|---|---|---|---|
| (a) | A | B | C | Total | |
| Units demanded | 8000 | 12000 | 10000 | ||
| Machine hours per unit | 1 | 2 | 1.5 | ||
| Total machine hours required | 8000 | 24000 | 15000 | 47000 | |
| Machine hours available | 44000 | ||||
| Shortage of machine hours | 3000 | ||||
| (b) | The limiting factor is | Machine Hours | |||
| (c) | Contribution per unit | 20 | 32 | 36 | |
| Machine hours per unit | 1 | 2 | 1.5 | ||
| Contribution per machine hour | 20 | 16 | 24 | ||
| (d) | Order of priority | first | C | ||
| second | A | ||||
| third | B | ||||
| Reason | Higher contribution per machine | ||||
| hour must take priority, followed | |||||
| by second highest if profit is to be | |||||
| maximised because machine | |||||
| hours are the limiting factor. | |||||
| (e) | Machine hours available for production | 8000 | 44000 | ||
| (f) | Contribution per machine hour | 20 | 16 | 24 | |
| (From (c) above) | |||||
| Total contribution | 160000 | ||||
| (g) | Total fixed costs | 140000 | |||
| Profit | |||||
| (h) | Number of units made | 8000 |