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Determine the order of priority for the manufacture

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Reference no: EM132385659

Question

Maldon Ltd manufactures and sells three products: X, Y and Z. Per unit data for these products is as follows:

Product

X Y Z

Selling price $200 $300 $250

Direct labour costs 25 75 30

Other variable costs 105 90 148

Due to labour shortages the company has only 2,000 direct labour hours available to manufacture inventory over the next three months. The direct labour rate is $10 per hour.

Requirements

(a) Determine the order of priority for the manufacture of X, Y and Z, given the labour hours constraint.

(b) If additional labour hours became available, what is maximum price that should be paid per hour if it is assumed that the additional hours will be used to manufacture product Y?

Reference no: EM132385659

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