Determine optimal utilization of constraining resource

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Reference no: EM132576188

A company is producing three products. Relevant information related to these product are as follows

                                       A (Rs.)                B (Rs.)                       C (Rs.)

Selling Price                   200                    240                 360

Direct Material                 30                     36                      54

Direct Labour                    20                    24                        36

Variable Manufacturing

Overhead                          15                       18                   27

Annual Demand

(Units)                         1115                           550                        600

Currently company is expecting shortage of material and purchase department has intimated that 60000 kg of material will be available next year. Cost of material is Rs.10 per kg.

Requirements

Question 1: Calculate the quantity of material required for one unit of each product.

Question 2: Calculated the contribution margin per kilogram of material for each product.

Question 3: Determine optimal utilization of constraining resource (Material).

Question 4: Calculate maximum contribution margin that company can earn.

Reference no: EM132576188

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