XYZ Ltd manufactures three products, X, Y and Z, for which the following information is available: X Y Z Sales demand 550 units 500 units 400 units Selling price (per unit) $16 $18 $14 Variable cost: material Labour 8 6 2 4 6 9 XYZ Ltd has existing inventory of 250 units of X and 200 units of Z, which it is willing to use us to meet the sales demand. All three products use the same direct materials and the same type of direct labour. In the next year, the available supply of material will be restricted to $4,800 (at cost) and the available supply of labour will be $6,600 (at cost). Required: Determine what product mix and sales mix would maximize XYZ Ltd’s profits in the next year, and prepare a profit statement based on the profit maximizing mix identified.
XYZ Ltd manufactures three products, X, Y and Z, for which the following information is available: X Y Z Sales demand 550 units 500 units 400 units Selling price (per unit) $16 $18 $14 Variable cost: material Labour 8 6 2 4 6 9 XYZ Ltd has existing inventory of 250 units of X and 200 units of Z, which it is willing to use us to meet the sales demand. All three products use the same direct materials and the same type of direct labour. In the next year, the available supply of material will be restricted to $4,800 (at cost) and the available supply of labour will be $6,600 (at cost). Required: Determine what product mix and sales mix would maximize XYZ Ltd’s profits in the next year, and prepare a profit statement based on the profit maximizing mix identified.
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