A company has only 4000 labour hours available for production in the next period and the following information is available:
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 !
labour is the limiting factor full production needs 5000 hours but labour availability is 4000 hour with product s has the lowest amount contribution per labour hour 40/5=$8 per hour so answer is b and max contribution is $41000 so there is only one correct option in this question
But there are 2 correct answers to this question.
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