Answer to Question #209607 in Operations Research for Tom

Question

Question No. 1

Messers A BC & Co has recently received an order to prepare 20000 units of their regular product which needs two types of material that is material A and Material B. To produce one unit of finished good 2.5 units of material A are required and 2 units of B are required. Each unit of material A is available for 25 Rs. Per unit and B is available for 30 Rs. Per unit. 15% of their purchase price is required for transportation. Two types of labor is also applied. Labour A uses 2 hours for one unit and labour 2 uses 4 hours for one unit. All types of labors are paid @ 25 Rs. Per hour and FOH is applied @ 20Rs. Per hour. Required: - If company applies 30% margin what price do you suggest for these units?

Answer 1

Material A

2.5 units X 25=62.5 Rs

62.5 Rs X 0.15=9.40 Rs

2 X 2.5 X 25=125 Rs

5hrs X 20= 100 Rs

Total for material A=296.9 Rs

Material B

2 units X 30=60 Rs

60 X 0.15=9 Rs

2 X 4 X 25=200 Rs

8 X 20=160 Rs

Total for material B=429 Rs

The production cost of one unit;

296.9 + 429=725.9 Rs

$\%\; of\; Margin\; +\; \%\; of\; production\; cost=100\%$

$Margin percentage + Production cost percentage=100$ %

100%=30% + production Cost percentage

Production Cost Percentage=100%-30%

Production Cost Percentage=70%

If 70%=725.9 Rs

100%=?

100% X (725.9/70)=1037 Rs

Price of 1 unit=1037 Rs

Price of 20000 units=?

20000 units X (1037 Rs/1)=20740000 Rs

=20740000 Rs