ACC4013 Financial Accounting Fundamentals and Statistical


An electrical engine manufacturer produces two models in line with governments new criteria, Ducashi and Mac S, using two factors of production, labour (L) and capital (K).  Ducashi takes 12 labour hours and 2 capital hours to make, whilst Mac S takes 6 labour hours and 10 capital hours to make.
The firm has available 5,000 labour hours and 2,000 capital hours per day. The firm makes £2000 profit from each Ducashi engine and £3000 profit from each Mac S engine. 
What output combination should the firm choose in order to maximise profits?
(Please show all calculation workings).  The following is a method statement of how the problem should be addressed:
a)Arrange the given information in tabular form, identifying and writing down the objective function and the constraints.
b)Using the calculation method find the output combination in order to maximise profits.
c)Using the graphical method plot the inequalities on a graph and identify the feasible region.
d)Find the optimum solution that satisfies the objective function and plot the iso-profit lines.
e)Give your recommendations to management, explaining your answer clearly.
Plan, create and develop mathematical models to solve appropriate business, management and accounting problems.
Break business problems down to manageable units, and understand the limitations of the models formulated, methods used, and solutions obtained.
Use appropriate quantitative methods, (mathematical and statistical) to evaluate and interpret accurate solutions to business and accounting problems.
Produce accurate results and communicate findings to an appropriate audience.

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