The following particulars are extracted from the records of a company. Particulars Product A Product B Sale price per unit |Consumption of material Material cost OMR 100 OMR 240 4 kg 6 kg OMR20 OMR 30 Direct labour cost 30 20 Direct expenses 10 12 Machine hours used 4 Fixed overheads per unit Variable overheads per unit OMR 10 OMR 20 30 40 Direct labour per hour is OMR 10. Comment on the profitability of each product [both use same raw material] when, I] total sales potential in units is limited II] total sales potential in value is limited III] raw material is in short supply IV} production capacity [in terms of machine hours] is limited. Assuming raw material as the key factor, availability of which is 20,000 kg and maximum sales potential of each product being 7000 units, find out the product mix which will yield maximum profits.
The following particulars are extracted from the records of a company. Particulars Product A Product B Sale price per unit |Consumption of material Material cost OMR 100 OMR 240 4 kg 6 kg OMR20 OMR 30 Direct labour cost 30 20 Direct expenses 10 12 Machine hours used 4 Fixed overheads per unit Variable overheads per unit OMR 10 OMR 20 30 40 Direct labour per hour is OMR 10. Comment on the profitability of each product [both use same raw material] when, I] total sales potential in units is limited II] total sales potential in value is limited III] raw material is in short supply IV} production capacity [in terms of machine hours] is limited. Assuming raw material as the key factor, availability of which is 20,000 kg and maximum sales potential of each product being 7000 units, find out the product mix which will yield maximum profits.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...
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