Solar Itd is approached to produce a special-order contract for 200 products

Subject:AccountingPrice:2.84 Bought6

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Solar Itd is approached to produce a special-order contract for 200 products. Each product requires 0.85kgs of material K. There are 400Kgs of material K in inventory. This material was purchased for another contract 2 years ago and the contract subsequently fell through and was never completed. Material K was purchased for £8.50 per kg but is held in inventory at £7.75 per kg. Material K can be sold for scrap at £3.50 per kg but could also be used as a substitute for material Z which is used within the manufacture of a number of products supplied by Solar Itd. A spray would have to be applied to material K, at a cost of £4.50 but this would mean that the company would not have to purchase Material Z at a cost of £7.00. The relevant cost of the material K is a) £1,445.00 b) £1,317.50 c) £595.00 d) £425.00 v) After having completed a linear programming exercise a company is trying to establish how much extra it can pay for additional quantities of material X. The objective function is to maximise 120H + 80L and the maximum contribution is £29,800. The binding constraints are Material X (2.5H +3.5L = 850) and Labour (5H +3L = 1,200) For each additional kg of material X the company can pay: a) Up to £4.00 above the current price b) Up to £26.00 above the current price c) £4.00 per kg d) £26 per kg