The Kohler Chemical Manufacturing Company produces two primary
chemical products to be used as base ingredients for a variety of
products. The 2016 budget for the two products (in thousands) was
as follows:
LX-4
ABC-8
Total
Level of production in litres
1,800
1,800
3,600
Direct materials
$4,500
$5,625
$10,125
Direct labour
2,700
2,700
5,400
Total direct manufacturing cost
$7,200
$8,325
$15,525
The following planning assumptions were used for the budget: (1) a
direct materials yield of 96%, and (2) a...