Question
In: Accounting
Perma Corporation makes three products, A, B and C. The budgeted unit costs and resource requirements...
Perma Corporation makes three products, A, B and C. The budgeted unit costs and resource requirements of each of these items are given below: Per unit A B C £ £ £ Direct material cost 10 30 20 Direct labour cost 8 20 16 Variable overhead 6 14 12 Budgeted volume per annum (units) 4,000 2,000 1,500 Selling price (£) 44 100 80 Fixed costs are expected to total £108,000. The cost of direct material is £2.5 per kilo. All three products are made from a specialist material, which is limited in supply at 40,000 kilos per annum. Required: a. Rank the three products in terms of their abilities to maximize contribution (You should support your answers with full numerical workings). b. Prepare an optimal production plan showing the maximum output of each product the company should produce (You should support your answers with full numerical workings). c. Based on your production plan in (b) above, calculate the amount of net profit the company will earn.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Dustin Co. makes three products, A, B and C. They have a constrained resource - machine...
Dustin Co. makes three products, A, B and
C.
They have a constrained resource - machine hours. There
are only 17,892 machine hours available a month.
The three products have the following data:
A
B
C
Selling Price per unit
6.00
16.00
11.00
Variable Cost per unit
2.00
4.00
6.00
Machine hours required
2
4
5
Demand for product in units
1,114
4,125
1,073
How much of product B should be produced?
ABC Limited makes three products; A, B and C. Details of product direct costs and volumes...
ABC Limited makes three products; A, B and C. Details of product
direct costs and volumes for the period are as follows:
Product
A
B
C
Direct material cost per unit
£5.00
£4.50
£12.50
Direct labour cost per unit
£9.00
£18.00
£27.00
Labour hours per unit
1 hours
2 hours
3 hours
Machine hours per unit
3 hours
6 hours
9 hours
Production volumes for period
3,500
750
750
Total production overheads for the period are £362,500.
ABC Ltd currently...
A firm makes two products, A and B. Each unit of A costs $10 and sells for $30. Each unit of B costs $5 and sells for $20.
A firm makes two products, A and B. Each unit of A costs $10 and sells for $30. Each unit of B costs $5 and sells for $20. If the firm's goal were to maximize profit what would be the appropriate objective function? Maximize profit = $40A - $25B Maximize profit = $40A + $25B Maximize profit = $20A +$15B Maximize profit = 0.25A +0.20B Maximize profit = $50(A + B)
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
84.00
$
70.00
$
74.00
Variable expenses:
Direct materials
25.20
21.00
9.00
Other variable expenses
25.20
31.50
42.80
Total variable expenses
50.40
52.50
51.80
Contribution margin
$
33.60
$
17.50
$
22.20
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 750 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling
price
$
88.00
$
72.00
$
78.00
Variable
expenses:
Direct
materials
26.40
18.00
9.00
Other variable
expenses
26.40
36.00
45.60
Total variable
expenses
52.80
54.00
54.60
Contribution
margin
$
35.20
$
18.00
$
23.40
Contribution
margin ratio
40
%
25
%
30
%
The company estimates that it can sell 900 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit): Product A B C
Selling price $ 88.00 $ 72.00 $ 78.00 Variable expenses: Direct
materials 26.40 18.00 9.00 Other variable expenses 26.40 36.00
45.60 Total variable expenses 52.80 54.00 54.60 Contribution margin
$ 35.20 $ 18.00 $ 23.40 Contribution margin ratio 40 % 25 % 30 %
The company estimates that it can sell 900 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
60.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
27.00
34.40
Total variable expenses
43.20
45.00
43.40
Contribution margin
$
28.80
$
15.00
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 1,000 units of each
product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
80.00
$
66.00
$
72.00
Variable expenses:
Direct materials
24.00
16.50
12.00
Other variable expenses
24.00
33.00
38.40
Total variable expenses
48.00
49.50
50.40
Contribution margin
$
32.00
$
16.50
$
21.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 700 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
60.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
27.00
34.40
Total variable expenses
43.20
45.00
43.40
Contribution margin
$
28.80
$
15.00
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 1,000 units of each
product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
54.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
22.50
34.40
Total variable expenses
43.20
40.50
43.40
Contribution margin
$
28.80
$
13.50
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 700 units of each product
per month. The same...
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