A company produce two products from a single ingredient that normally costs £1 per kg and is in scarce supply Product da
Posted: Tue Jul 05, 2022 11:27 am
A company produce two products from a single ingredientthat normally costs £1 per kg and is in scarce supply
Product data are Product 1 Product 2
Maximum demand (units) 2800 1000
Optimum planned production (units) 2800 500
Contribution per unit 6.00 9.00
Raw material used (kg) 3 5
The unit contribution figures are calculated aftercharging material cost at £1 per kg.
An additional source for the ingredient has been locatedwith 2,000kg available.
Calculate the maximum price the company should beprepared to pay in total for the additional material.
A. 3600
B. 4000
C. 5600
D. 6000
Product data are Product 1 Product 2
Maximum demand (units) 2800 1000
Optimum planned production (units) 2800 500
Contribution per unit 6.00 9.00
Raw material used (kg) 3 5
The unit contribution figures are calculated aftercharging material cost at £1 per kg.
An additional source for the ingredient has been locatedwith 2,000kg available.
Calculate the maximum price the company should beprepared to pay in total for the additional material.
A. 3600
B. 4000
C. 5600
D. 6000