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    Planning With Limiting Factors - Online 20200330

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    biggykhair
    The document contains 4 scenarios presenting optimization problems for various manufacturing companies with limiting factors such as available labor hours, machine hours, and material quantities. For each scenario, the assistant is asked to determine the optimal production mix or plan to maximize profits or contributions given the stated constraints.

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    Planning With Limiting Factors - Online 20200330

    Uploaded by

    biggykhair
    46 views3 pages
    The document contains 4 scenarios presenting optimization problems for various manufacturing companies with limiting factors such as available labor hours, machine hours, and material quantities. For each scenario, the assistant is asked to determine the optimal production mix or plan to maximize profits or contributions given the stated constraints.

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    planning with limiting factors cost accounting

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    Planning with limiting factors - Online 20200330

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    The document contains 4 scenarios presenting optimization problems for various manufacturing companies with limiting factors such as available labor hours, machine hours, and material quantities. For each scenario, the assistant is asked to determine the optimal production mix or plan to maximize profits or contributions given the stated constraints.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    46 views3 pages

    Planning With Limiting Factors - Online 20200330

    Uploaded by

    biggykhair
    The document contains 4 scenarios presenting optimization problems for various manufacturing companies with limiting factors such as available labor hours, machine hours, and material quantities. For each scenario, the assistant is asked to determine the optimal production mix or plan to maximize profits or contributions given the stated constraints.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 3

    MANAGEMENT ACCOUNTING

    PLANNING FOR LIMITING FACTORS

    You are the chief business strategies for the Ghana Venture Capital Trust Fund. You are the leader
    of the team involves in implementing turnaround strategies for various SME’s benefiting from the
    fund.

    Scenario 1: Afrigold Electronics


    Afrigold electronics is electronic home appliance assembling company that is currently
    constrained in meeting its demand for the month of April 2020. The manager of the facility has
    disclosed to your outfit that, due to some upcoming festivities for the month, available labour hours
    are limited to 175,000 hours. Sixty Thousand (60,000) units of the materials are guaranteed for
    delivery, as the supply chain will also be affected. To ensure the goods are available to the public,
    the company policy is to produce and sell at least 3,000 units of each product every month. The
    company currently has demand the four different models of the popular juicers as follows:

    Alpha Beta Combo Deca


    Demand (Units) 10,000 6,000 12,000 8,000
    The individual product costs and selling price are as follows:

    Alpha Beta Combo Deca


    Selling price per unit (GHS) 60 45 50 65
    Direct material cost per unit (GHS) 15 10 10 15
    Direct labour cost per unit (GHS) 20 16 16 24
    Variable Overhead cost per unit (GHS) 12 8 10 11

    Direct material required per unit 3 2 2 3


    Direct labour hours required 5 4 4 6

    Required: Your team is to advise the management of the company on the most profitable
    production mix and ascertain the most optimal profit expectation if the fixed cost for the month is
    GHS 240,000

    @desmondaboagye2020
    Scenario 2: Kizito Agro Processing
    Kizito is an agro processing company that process cocoa into to variants of chocolate that goes
    through three processing departments. Details are shown below regarding the time per unit
    required in each department, the available hours in each department and the contribution per unit
    of each product

    Milk Choco Dark Choco Available Hours


    Department A (hrs /unit) 8 10 11,000
    Department B (hrs / unit) 4 10 9,000
    Department C (hrs / unit) 12 6 12,000
    Contribution per unit (GHS/unit) 4 8

    There is unlimited demand for Milk Choco, but demand for Dark Choco is limited to 600 units
    per unit per annum.
    Required: Determine the optimal production plan. Identify possible slacks in resources

    Scenario 3 – Zoomba Company Limited


    One of the associates analyzing Zoomba Company Limited has carried out the analysis of the
    company and presented the results. Two constrains in Assembly and Packaging were identified
    as following:
    Assembling: 20x + 25y = 500
    Packaging: 40x + 25y = 800
    The optimal production was derives at x = 15 and y = 8 giving the maximum contribution of
    1,800.

    Required: Suppose one extra hour was made available for assembling process. Calculate the
    shadow price for this additional hour of assembling time

    Scenario 4: XXL Limited


    One of the associates analyzing XXL Limited has carried out the analysis of the company and
    presented the results. The results for the linear programming problem is given as follows:

    @desmondaboagye2020
    Constraint Normal Cost Shadow Price
    Skilled labour (GHS per hr) 20 12
    Unskilled labour (GHS per hr) 10 -
    Material (GHS per Kg) 5 3

    Required:
    a. Which two constrains give rise to the optimal solution
    b. Overtime is paid at “time-and-a-half”. Is it worth paying overtime to help relax the
    constraints
    c. A new product has been proposed with the following proposes cost and revenues.

    GHS
    Selling Price 80
    Skilled labour (2hrs@20) (40)
    Unskilled Labour (1hr@10) (10)
    Material (3kg@5) (15)
    Profit per unit 15
    Assuming that the constraints cannot be relaxed, should the new product be manufactured?

    @desmondaboagye2020

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