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Essay text:
Variable factory overheads are absorbed at two thirds of the direct labour cost.
Fixed overhead for the year relating to production is estimated at $40,500.
For the year 2006, it is expected the following to be sold:
Silky 9,980, Dryee 7,500 and Oilie 5,000.
The selling price per bottle of each type of product is expected to be:
Silky $14.00, Dryee $15.80 and Oilee $22.65
It is expected that in the year 2006, supplies of Sulfate will be limited to a total of 1 million grams of sulfate, as there is a shortage of supply from the local suppliers due to the high demand.
Required:
(a) Assume that no alternative supplies of sulphate can be located in 2006 and a minimum of 2,500 bottles of each product must be produced during the year to meet the contracts already signed, calculate the number of bottles of each product that should be produced in order to maximise profit and state the amount of this profit...
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