Bokomo Inc., produces corn-flakes and bran-flakes. The manufacturing process is highly mechanised; both products are...
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Accounting
Bokomo Inc., produces corn-flakes and bran-flakes. The manufacturing process is highly mechanised; both products are produced by the same machinery by using different settings.
For the coming year, 200 000 machine hours are available. Management is trying to decide on the quantities of each product to produce. The following data are available:
Corn-flakes Bran-flakes
Machine hours per unit 1.00 0.50
Unit selling price R2.50 R3.00
Unit variable cost R1.50 R2.25
Because of market conditions, the company can sell no more than 150 000 boxes of corn-flakes and 300 000 boxes of bran-flakes.
Required:
5.1 Use the graphical method to determine the optimal production mix. (20)
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