Answer Happy

Potsanyane (Pty) Limited manufactures three products, Scones, Cake, Biscuits and sells them on the local market. The following information is available: Products and costs per unit in Maloti: Products Manufacturing costs: Material Labour Variable overheads Total variable costs Selling price Demand in units Material usage in kilograms Labour time in hours Material available Labour time Products Cost per unit Required: (a) (b) (c) Scones (d) 16 32 15 63 96 1600 3.2 16 12 288 kg 65 000 hours Scones Cake M72 32 28 These products can also be imported from Swaziland at the following prices: 8 68 128 800 6.4 14.4 Cake Biscuits M96 24 48 16 88 144 960 4.8 24 Biscuits M112 Without making use of the import opportunity, determine the most profitable mix and (12 marks) calculate the total contribution. Making use of the import opportunity, determine the differential contribution per (6 marks) product and rate the products in order of profitability. Assuming Potsanyane (Pty) has a highly valued customer who has a minimum demand of 500 cakes; re-compute the quantities of the three products to be produced (4 marks) by the company within the existing capacity constraints. (3 marks) State three ways in which linear programming may be useful for managerial planning, decision making and control activities. Total marks = (25 marks)