Reference no: EM132946559

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                        20                10

• 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.

Required

Problem 1: 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.