Question

Question -2 Cloth Ltd. is a large shirt manufacturing company producing two types of shirts A and B. Due to the shortages in some resources, the company has difficulty in deciding on the optimum production plan for the forthcoming period. You have been asked to analyze the situation and have been presented with the following data:

Answer 1

Note:-In the giveh queston these i an tping erhoh, it &hould be "variable Coct' in place of variable oyeshead fnewes A) Contuibutton calulation shist A) pauticulars Matesial 180 (Pind Direct labour : lled demi-skilled tTatel varioble Cost (a) 22-5Ui S.S 204.25 32 5 seling paice (b) Conthibution per Unt $72 Lb-a) 250 $120.75 Resouunces Aequihed for given demand:- Demand X P.ouit Material heguired 62000 Meters Material LoDox 57o00 X 6 material availability Hence Material is not casce hesource 65000 MetexS Labour 7o00 X/18. 75 4600X/22.5 6000 + 8750 = 14750 labour HoUY Availab le labous Houss hence labour is a wil calculate Contuibuton perlabour hous mie to decide optimun phoduct Mix 12 000 scarce hesousce, we Rest on Next

Note:- In the giveh queston thene it an typing error, it Should be "variable ost in place of variable oveshead A) Contuibutton caleulation Anawer hiAtB () 180 (pind shist A) pastiulars Material iAect labour I&-73 PUuitH 22-5 demi-skiled Tatal vasiable Cost (a) 5-S 204.25 395 sclling paice tb Conthibulion per Ut $2 b-a) 250 $120.75 Resources Aequihed for given demand:- Demond X. P. Uwt Material heguired 62000 Meters Material 4odox5t F000X6= matirial awailability 65000 Metexs Hence Material is not scasce hesource 4p00X22.S+ 7or0X18.75 IS Labour 6000 + 87S0 = 14750 labour HOUYS Available Labous Houss hence labous is a scarce hesource we will Calculate Conthibuton per labour hous mix to decide optimUm phoduct mix 12000 Rest on Next page
Note- I guess question has a typing error, it has variable overheads if taken into consideration will result in Negative contribution. That means company should not produce any of the products. So it should be Variable cost instead of variable overhead to solve the sum otherwise there is nothing to solve in the question.