ABC Ltd manufactures three products A, B and C using the same machine which has an annual working capacity of 70,000 hours. The details of costs and selling price of these products are as follows:

A (Rs.)

B (Rs.)

C (Rs.)

Sales price per unit

400

308

448

Variable Cost per unit:

Direct Material

140

80

160

Direct Wages (@ Rs. 16 per machine hour)

96

64

112

Variable Overheads

72

80

84

Total Variable Cost per unit

308

224

356

Maximum Market Demand (in units)

6,000

5,000

10,000

Total Fixed Cost of the company amount to Rs. 3,50,000 per annum. The company could purchase similar products from an assembly centre at the following costs:

A

Rs. 350 per unit

B

Rs. 280 per unit

C

Rs. 400 per unit

You are required to recommend which products the company should manufacture and purchase in what quantity to maximize the company profit and also compute the overall profit of the company as per your recommended optimum production mix.

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