Question

Question 3

Mr Bean Mart produces and sales four types of toys namely Blaze (B), Pinocchio (P), Paw Patrol (PP) and Scooby (S). Information relating to the production of these toys is given as follows:

             B                     P                      PP                   S

Sales price/ unit                                    $200                 $250                  $180                $400

Materials required per unit                      $100                  $150                 $110                 $220

Direct labour ($10 per hour)                     $40                    $50                  $20                   $60

Variable cost per unit                              $20                    $25                  $10                   $30

Monthly sales demand (Units)                   500                  800                   1 000                400

There is a limit to the availability of labour and only 8 000 hours are available each month.

Requirement:

Determine the production mix that maximises throughput and calculate the resultant throughput of your proposed production mix.

Answer 1

		B	P	PP	S
	Sales Price/Unit	200.00	250.00	180.00	400.00
	Less: Direct Material Cost	100.00	150.00	110.00	220.00			B	P	PP	S
	Less: Direct Labor Cost	40.00	50.00	20.00	60.00		Direct Labor Cost	40.00	50.00	20.00	60.00
	Less: Variable Cost	20.00	25.00	10.00	30.00		Direct Labor Cost PH	10.00	10.00	10.00	10.00
	Contribution Margin PU	40.00	25.00	40.00	90.00		Labor Hours PU	4.00	5.00	2.00	6.00
	Direct Labor Hour PU	4.00	5.00	2.00	6.00
A	Contribution Margin Per DLH	10.00	5.00	20.00	15.00		Market Demand	500	800	1000	400
	Ranking basis A	III	IV	I	II
							Capacity Consitrint	8000
	Utilization of Resources Basis Ranking:
	Products	Ranking	Demand	Labor Hours PU	Production Hours as per Rank		Production Units
	B	III	500	4	2000		500	Production Hours/Labor Hour PU
	P	IV	800	5	1600	(8000-6400)	320
	PP	I	1000	2	2000		1000
	S	II	400	6	2400		400
					8000
	Contribution Margin as per Above Production:
	Products	Production Units	Contribution Margin PU	Total Contirbution
	B	500	40	20000
	P	320	25	8000
	PP	1000	40	40000
	S	400	90	36000
				104000