A manufacturing company produces and sells products P, Q and R. It has an available inactive-hour capacity of one-lakh hours, interchangeable among the three products. Presently, the company produces and sells 20,000 units of P and 15,000 units each of Q and R. The unit-selling price of the three products are Rs. 25, Rs. 32 and Rs. 42 for P, Q and R, respectively. With this price structure and the aforesaid sales mix, the company is incurring loss. The total expenditure exclusive of fixed charges (presently, Rs. 5 per unit) is Rs. 13.75 lakhs. The unit cost ratio among the products P, Q and R is 4: 6: 7. Since the company desires to improve its profitability without changing its cost and price structures, it has been considering the following three mixes so as to be within its total available capacity.
You are required to compute the quantum of loss now incurred and advise the most profitable mix which could be considered by the company.
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