Reference no: EM132971479
Baseheart Williams Limited produces two products, the Cee and the Dee, which both use the same grade of specialist labour. Only 3600 specialist labour hours are estimated to be available for the 20X8 financial year because of skills shortages in the economy as a whole.
The directors must decide on a production plan for 20X8. They estimate that it would be possible to sell 400 units of Cee and 400 units of Dee but the actual amount that can be produced and sold is likely to be limited by the labour shortage.
The following information is available about the products:
Cee Dee
£ £
Revenue per unit 600 666
Variable costs per unit 250 270
Contribution 450 396
Number of hours of specialist labour required per unit 7 6
Problem 1: What is the optimal production plan for 20X8 (to the nearest whole unit)?
a. 400 units of Dee and 200 units of Cee
b. 400 units of Cee and 133 units of Dee
c. 400 units of Dee and 171 units of Cee
d. 400 units of Cee and 114 units of Dee
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