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Hi
I need help with the following question please. Part a,b and c.
[img]https://dl.dropbox.com/u/76386923/F5/photo%201.PNG[/img]
[img]https://dl.dropbox.com/u/76386923/F5/photo%202.PNG[/img]Thanks in advance
Sorry – but I can only help with specific problems – not with a whole question
I am getting two answers with part as as im not sure if fixed overheads are included in variable costs or if they are not included. all the examples in the bpp book do not even mention the fixed overheads so not sure where to put it.
i know i have to rank the beds in contribution per unit order.the answer i got without adding fixed overhead was
double beds 1st and 500 can be made
single bed 2nd 500 can be made
bunk 3rd 175 can be made
i don’t have any answers for it so need help.for part b i got the answer
profit with 500, 175 and 500 units will be $50875
but profit with 2 extra employees it will be $50420
still not sure where to use the fixed o/h.Fixed overheads are, by definition, the same however many units are produced.
It is only the contribution that will change, and so to get maximum profit you need to find the production mix that gives maximum contribution.
Once you have got maximum contribution, then subtract whatever the total fixed overheads are and this will then give you the maximum profit figure.
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