Management Accounting For Decision Making

Nescol
Task 1
Calculate mathematically what the optimum mix is using the following
information:

Product A requires 4 kgs of material

Product B requires 2 kgs of material
Limiting factor 14,750 kgs of material.

Product A requires 3 hours of labour

Product B requires 8 hours of labour
Limiting factor 20,000 hours of labour.

Task 2
Calculate mathematically what the optimum mix is using the following
information:

Product A requires 3 kgs of material

Product B requires 4 kgs of material
Limiting factor 50,000 kgs of material.

Product A requires 6 hours of labour

Product B requires 2 hours of labour
Limiting factor 40,000 hours of labour.

Task 3
Calculate mathematically what the optimum mix is using the following
information:

Product A requires 6 kgs of material

Product B requires 8 kgs of material
Limiting factor 35,000 kgs of material.

Product A requires 2 hours of labour

Product B requires 7 hours of labour
Limiting factor 25,000 hours of labour

Task 4
Calculate mathematically what the optimum mix is using the following
information:

Product A requires 12 kgs of material

Product B requires 4 kgs of material
Limiting factor 59,950 kgs of material.

Product A requires 4 hours of labour

Product B requires 5 hours of labour
Limiting factor 22,000 hours of labour
Management Accounting For Decision Making
Nescol
Task 1
4A + 2B = 40,000 (Line 1)
3A + 8B = 20,000 (Line 2)

Multiply line 1 by 4 gives;

16A + 8B = 160,000
Less Line 2 3A + 8B = 20,000
13A = 140,000
A= 140,000/13
A = 10,769

Substitute this into line 1, 4A + 2B = 40,000

gives
(4 x 10769) + 2B = 40,000
43076 + 2B = 40,000
2B = 40,000 – 43076
2B= -3076
B = -3076/2
B = -1538
Optimum mix is to produce 10,769 units of A and -1,538 units of B

Task 2
3A + 4B = 50,000 (Line 1)
6A + 2B = 40,000 (Line 2)

Multiply line 1 by 2 gives;

6A + 8B = 100,000
Less Line 2 6A + 2B = 40,000
6B = 60,000
B = 60,000/6
B = 10,000

Substitute this into line 1, 3A + 4B = 50,000

gives
3A + (4 x 10000) = 50,000
3A + 40,000 = 50,000
3A = 50,000 - 40000
3A = 10,000
A= 10,000/3
A = 3333
Optimum mix is to produce 3333 units of A and 10,000 units of B
Management Accounting For Decision Making
Nescol
Task 3
6A + 8B = 35,000 (Line 1)
2A + 7B = 25,000 (Line 2)

Multiply line 2 by 3 gives;

6A + 21B = 75,000
Less Line 1 6A + 8B = 35,000
13B = 40,000
B = 40000/13
B = 3076 (remember to round down here)

Substitute this into line 1, 6A + 8B = 35,000

gives
6A + (8 x 3076) = 35,000
6A + 24,608 = 35,000
6A = 35,000 – 24,608
6A = 10,392
A= 10,392/6
A = 1,732
Optimum mix is to produce 1,732 units of A and 3076 units of B

Task 4
12A + 4B = 59,950 (Line 1)
4A + 5B = 22,000 (Line 2)

Multiply line 2 by 3 gives;

12A + 15B = 66,000

Less Line 1 12A + 4B = 59,950
11B = 6050
B = 6050/11
B = 550

Substitute this into line 2, 4A + 5B = 22,000

gives
4A + (5 x 550) = 22,000
4A + 2750 = 22,000
4A = 22,000 - 2750
4A = 19,250
A= 19,250/4
A = 4812
Optimum mix is to produce 4812 units of A and 550 units of B