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MC Question 6
A company has the following production planned for the next four weeks. The figures reflect the full capacity level of operations. Planned output is equal to the maximum demand per product.
| Product | A | B | C | D |
|---|---|---|---|---|
| $ per unit | $ per unit | $ per unit | $ per unit | |
| Selling price | 160 | 214 | 100 | 140 |
| Raw material cost | 24 | 56 | 22 | 40 |
| Direct labour cost | 66 | 88 | 33 | 22 |
| Variable overhead cost | 24 | 18 | 24 | 18 |
| Fixed overhead cost | 16 | 10 | 8 | 12 |
| Profit | 30 | 42 | 13 | 48 |
| Planned output | 300 | 125 | 240 | 400 |
| Direct labour hours per unit | 6 | 8 | 3 | 2 |
The direct labour force is threatening to go on strike for two weeks out of the coming four. This means that only 2,160 hours will be available for production rather than the usual 4,320 hours.
If the strike goes ahead, which product or products should be produced if profits are to be maximised?
A. D and A
B. B and D
C. D only
D. B and C