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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Fong Co (profit maximising units)
Fong Co is involved in the processing of sheet metal into products A, B and C using three processes, pressing,stretching and rolling.
Information about the three products per meter is as follows
Product A Product B Product C
Selling Price 70.0 60.0 70.0
Variable costs
Materials 3.0 2.5 10.0
Labour 10·0 10.0 15.0
Other Factory Costs are all fixed and total $18000000 per year.
Raw material for the sheet metal is first pressed then stretched and finally rolled.The pressing process is the bottleneck
Processing time per meter
Product A Product B Product C
Hours 0.5 0.5 0.4
There are 225000hours of pressing time available each year.maximum demand for each product is 200000 metres per year.
Note1:
The finance director has just told that the company has employed sufficient labour to work 700000 hours per year,which is sufficient to meet maximum demand.Labour is paid 10$ pr hour.Due to agreements with the unions they pay the amount of labour in full
QUESTION-How many metres of each product should be made per year in order to maximise profit?
Sir how to do this??
Sir don’t bother I got it .Sorry
I am pleased that you have got it 🙂
