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Buttercup Ltd manufactures and sells three products (R, S and T). These products are made using the same machinery. The total machining time available each month is 10,500 hours but this is insufficient to produce all the units of R, S and T required to meet maximum demands. No stocks of these products are held.The following information is available:Product R Product S Product TSelling price per unit £60 £75 £84Contribution to sales ratio 20% 24% 25%Machining minutes per unit 40 54 75Maximum monthly demand (units) 9,000 6,000 3,000Total Fixed Cost: £80,000Required:frown:a) Calculate the monthly shortfall in machining hours.(b) Determine the monthly production plan in units that will maximise the company’s total contribution from products R, S and T and calculate this total contribution and profits.I have worked out the contribution per unit and I know the answer for the MH required per unit, for R it's 0.67MH and S it's 0.9MH and T it's 1.25MH but how do you get to that???
Original post by natmictx
Buttercup Ltd manufactures and sells three products (R, S and T). These products are made using the same machinery. The total machining time available each month is 10,500 hours but this is insufficient to produce all the units of R, S and T required to meet maximum demands. No stocks of these products are held.The following information is available:Product R Product S Product TSelling price per unit £60 £75 £84Contribution to sales ratio 20% 24% 25%Machining minutes per unit 40 54 75Maximum monthly demand (units) 9,000 6,000 3,000Total Fixed Cost: £80,000Required:frown:a) Calculate the monthly shortfall in machining hours.(b) Determine the monthly production plan in units that will maximise the company’s total contribution from products R, S and T and calculate this total contribution and profits.I have worked out the contribution per unit and I know the answer for the MH required per unit, for R it's 0.67MH and S it's 0.9MH and T it's 1.25MH but how do you get to that???

I am not an expert, but i think you need to check the maximum number of products that each product line of R, S and T can produce within the monthly capacity of 10.5k hours. Then you work backwards to see the optimal number that you can produce from each product to meet the target.

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