Hawkins Ltd manufactures three types of wheelbarrow. These wheelbarrows are designated as A1, A2 and A3. All three types of wheelbarrow use the same grade of skilled labour and the wage rate of this labour is currently £6.50 per hour. The following is a unit cost statement for each type:
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Direct materials |
5 |
6 |
8 |
|
Direct labour |
9 |
12 |
11 |
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Other direct costs |
3 |
2 |
5 |
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Selling price per unit |
25 |
32 |
28 |
The company plans to produce 5,000 of each wheelbarrow in March 2014. However, owing to a shortage of skilled labour, there are only 15,000 hours of skilled labour available.
(a)Calculate the most profitable production pattern to follow, given to the shortage of skilled labour.
(b)Show the number of each type of wheelbarrow that should be manufactured.
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