Ausco Products provides the following information: The total labour availability is limited to 1000 hours at these costs. Which products should Ausco Products produce?

Question

Ausco Products provides the following information:  The total labour availability is limited to 1000 hours at these costs. Which products should Ausco Products produce?

Quizplus · Accepted Answer

To determine the best choice(s) of products to produce, we need to calculate the total labour hours required for each product and make sure that the total labour hours do not exceed the available 1000 hours.

Product X requires 250 hours of labour at a cost of $5 per hour, so the total labour cost for producing Product X is 250 x $5 = $1250.

Product Y requires 200 hours of labour at a cost of $7.50 per hour, so the total labour cost for producing Product Y is 200 x $7.50 = $1500.

Product Z requires 300 hours of labour at a cost of $6 per hour, so the total labour cost for producing Product Z is 300 x $6 = $1800.

If we were to produce only Product X, then we would use up 250 of the available 1000 labour hours, leaving 750 labour hours for other products.

If we were to produce only Product Y, then we would use up 200 of the available 1000 labour hours, leaving 800 labour hours for other products.

If we were to produce only Product Z, then we would use up 300 of the available 1000 labour hours, leaving 700 labour hours for other products.

However, if we were to produce both Product X and Product Y, then we would use up a total of 450 labour hours (250 for Product X and 200 for Product Y), leaving us with 550 labour hours for other products.

Therefore, the best choice(s) of products to produce are D) Product X and Y, as this would generate the highest revenue while still staying within the available labour hours.

Ausco Products Provides the Following Information: the Total Labour