Problem:
A company produces three products and is reviewing the production and sales budgets for the next accounting period. The following information is available for the three products:
|
|
Product X
|
Product Y
|
Product Z
|
|
Contribution per unit
|
Rs 12
|
Rs 10
|
Rs 6
|
|
Machine hours required per unit
|
6 hours
|
2 hours
|
1 hour
|
|
Estimated sales demand
|
200 units
|
200 units
|
200 units
|
|
Required machine hours
|
1200 hours
|
400 hours
|
200 hours
|
Machine capacity is limited to 1200 hours for the period and is insufficient to meet total sales demand.
You have been asked to advice as to which products should be produced during the period.