Question

In: Accounting

Product details are as follows: Product P Q R S Selling price (£/unit) 42.00 57.00 54.60...

Product details are as follows:

Product P Q R S
Selling price (£/unit) 42.00 57.00 54.60
Material T1 (Kg/unit) 4 6 6
Material T2 (Kg/unit) 4 4.4 3.2 6
Direct labour (hours/unit) 1.2 2.4 3 3.4
Variable production overheads (£/unit) 2.20 2.60 2.20 2.80
Fixed production overheads (£/unit) 3.00 3.20 3.40 2.80
Expected demand for next month (units)         1,900         2,000         1,800

Products P, Q and R are sold to customers, while Product S is a component used in the manufacture of the other products.

Material T1 is expected to be in short supply next month. The company has received a delivery of 22,000 kilos of T1 which is expected to be in stock at the start of next month.The company cannot get further supplies unless it pays a premium price. The normal market price for T1 is £2.50 per Kg.

T2 costs £3.00 per Kg and direct labour is paid £4.00 per hour.

Required: Determine the optimum production schedule on the assumption that no additional purchases are made.

Solutions

Expert Solution

Particulars P Q R Total
Demand 1900 2000 1800
Material T1 required kgs to fulfill the demand 7600 12000 10800 30400
Material T1 available 22000
Shortage 8400

There is a shortga of 8400 kgs of Material T1. so, contribution per Material kgs need to be calculated for deciding optimal contribution.

Calculation of Contribution per Material T1:

Particulars P Q R
Selling price per unit 42 57 54.6
Less - Variable costs
Material T1 10 15 15
Material T2 12 13.2 9.6
Direct Labour Cost 4.8 9.6 12
Variable OH 2.2 2.6 2.2
Total Variable costs 29 40.4 38.8
Contribution Per unit 13 16.6 15.8
Materials kgs/unit 4 6 6
Contribution per Materials T1 3.25 2.77 2.63

So, we should produce Product P first as it has highest contribution per material kgs. Then, we should produce Product Q,then Product R

Optimum Production Schedule:

Particulars P Q R Total
Annual Demand 1900 2000 1800 5700
Material T1 (Kg/unit) 4 6 6
Material T1 required for demand 7600 12000 10800 30400
Material T1 to be used 7600 12000 2400 22000
Production as per the usage of Material T1 1900 2000 400 4300

Related Solutions

Beans manufactures a single product, details of which are as follows. Per unit $ Selling price...
Beans manufactures a single product, details of which are as follows. Per unit $ Selling price 700 Direct Materials 90 Direct labour 120 Variable overheads 200 Annual fixed production overheads are budgeted to be $10 million and the company expects to produce 200,000 units each year. Overheads are absorbed on a per unit basis. Fixed operational expenses for the quarter are as follows ·         Selling costs $400,000 ·         Administrative costs $1,500,000 ·         Distribution costs $600,000 Actual stock data for quarter of 2020 are...
Prove p → (q ∨ r), q → s, r → s ⊢ p → s
Prove p → (q ∨ r), q → s, r → s ⊢ p → s
Suppose S = {p, q, r, s, t, u} and A = {p, q, s, t}...
Suppose S = {p, q, r, s, t, u} and A = {p, q, s, t} and B = {r, s, t, u} are events. x p q r s t u p(x) 0.15 0.25 0.2 0.15 0.1 (a) Determine what must be p(s). (b) Find p(A), p(B) and p(A∩B). (c) Determine whether A and B are independent. Explain. (d) Arer A and B mutually exclusive? Explain. (e) Does this table represent a probability istribution of any random variable? Explain.
FOR EAICH PAIR OF PROPOSITIONS P AND Q STATE WHETHER ON NOT p=q p=(s→(p ∧¬r)) ∧...
FOR EAICH PAIR OF PROPOSITIONS P AND Q STATE WHETHER ON NOT p=q p=(s→(p ∧¬r)) ∧ ((p→(r ∨ q)) ∧ s), Q=p ∨ t
Show that if P;Q are projections such that R(P) = R(Q) and N(P) = N(Q), then...
Show that if P;Q are projections such that R(P) = R(Q) and N(P) = N(Q), then P = Q.
For p, q ∈ S^1, the unit circle in the plane, let d_a(p, q) = min{|angle(p)...
For p, q ∈ S^1, the unit circle in the plane, let d_a(p, q) = min{|angle(p) − angle(q)| , 2π − |angle(p) − angle(q)|} where angle(z) ∈ [0, 2π) refers to the angle that z makes with the positive x-axis. Use your geometric talent to prove that d_a is a metric on S^1.
A list of six positive integers, p, q, r, s, t, u satisfies p < q...
A list of six positive integers, p, q, r, s, t, u satisfies p < q < r < s < t < u. There are exactly 15 pairs of numbers that can be formed by choosing two different numbers from this list. The sums of these 15 pairs of numbers are: 25, 30, 38, 41, 49, 52, 54, 63, 68, 76, 79, 90, 95, 103, 117. Which sum equals r + s?
Q 2?Rafique Inc. makes product A and sells at selling price of SAR 45 per unit....
Q 2?Rafique Inc. makes product A and sells at selling price of SAR 45 per unit. Badr Inc. wants to buy 5,000 units at SAR 27 per unit. Rafique Inc. has a normal capacity of 101,000 units and projected sales to regular customers this year is 92,000 units. Per unit costs traceable to the product (based on normal capacity of 92,000 units) are listed below? Direct Materials??8.1 Direct Labour?`??6.0 Variable Mfg. Overhead?6.2 Fixed mfg. overhead??4.8 Fixed administrative costs?0.8 Fixed Selling...
Q 2?Rafique Inc. makes product A and sells at selling price of SAR 45 per unit....
Q 2?Rafique Inc. makes product A and sells at selling price of SAR 45 per unit. Badr Inc. wants to buy 5,000 units at SAR 27 per unit. Rafique Inc. has a normal capacity of 101,000 units and projected sales to regular customers this year is 92,000 units. Per unit costs traceable to the product (based on normal capacity of 92,000 units) are listed below? Direct Materials??8.1 Direct Labour?`??6.0 Variable Mfg. Overhead?6.2 Fixed mfg. overhead??4.8 Fixed administrative costs?0.8 Fixed Selling...
Whitacre Products Inc. makes two products—P32W and I90J. Product P32W's selling price is $42.00 and its...
Whitacre Products Inc. makes two products—P32W and I90J. Product P32W's selling price is $42.00 and its unit variable cost is $26.20. Product I90J's selling price is $320.00 and its unit variable cost is $196.00. The monthly demand is 3,300 units for product P32W and 900 units for I90J. The constrained resource is a particular machine that is available for 8,800 minutes each month. Each unit of product P32W requires 1 minutes on this machine and each unit of product I90J...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT