Question 10.40 Wechsler Ltd produces three products: A130, B324 and C587. All th

Question

Question 10.40 Wechsler Ltd produces three products: A130, B324 and C587. All three products use the same direct material, Brac. Unit data for the three products are: Product A130 B324 $168 C587 $210 Selling price Variable costs $252 Direct materials Labour and other costs $72 $84 8 kg $45 $81 5 kg $27 120 Quantity of Brac per unit The demand for the products far exceeds the direct materials avaiable to produce the products. Brac costs $9 per klogram, and a maximum of 5000 kilograms is available each month. Wechsler must produce a minimum of 200 units of each product Required How many units of product A130, B324 and C587 should wechsler produce? What is the maximum amount Wechsler would be willing to pay for another 1200 kilograms of Brac? 1, 2.

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering 10.40 :

10.40) 1) A130 B324 C587 Contribution 252-72-84 168-45-81 210-27-120 96 42 63 quantity of brac in kg 8 5 3 contri per brac unit 12 8.4 21 preferred production II III I Units of product produced 200 200 800 brac used 1600 1000 2400=5000 2) Maximum amount of the paid for next 1200 kg of brac= $9 + difference between contribution of C587 - A130 = 9 + (21-12) = $18 per kg

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