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Question - ABC Company makes two products: R and S. The unit costs of R and S is provided as follows.
One unit of R ($)
One unit of S ($)
Direct materials
10
30
Direct labour ($20 per hour)
60
20
Variable overheads
The sale price for R is $120 per unit. The sale price for S is $ 90 per unit. During the upcoming month, the number of available direct labour hours is limited to 1,000. Sale demand in this month is expected to be 300 units of R, and 400 units of S. Determine the profit-maximising production mix for this month, assuming that monthly fixed costs are $4,000, and that opening inventories of finished goods and work in progress are nil.
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