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 !
ACCA Forums
MAProduction
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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