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Test #1

Test #1

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James Martin
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37 views

Test #1

Test #1

Uploaded by

James Martin
Copyright
© © All Rights Reserved
Available Formats
Download as PDF or read online on Scribd
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Soe rakes four products, A, B, C and D, using the same direct labour wrk ca om all the products. The company has no inventory of finished goods. Direct labour is paid F's. 12 PEt Hou. To meet the sales demand in full company would require 12,000 hours of direct labour time. Only 6,000 direct labour hours are available during the year. Budgeted data for the company is as follows: Product A B c D it 4,000 5,000 8,000 4,000 Annual sales demand (units) a a Pee ae Direct materials cost 3.0 6.0 5.0 6.0 Direct labour cost 6.0 120 30 90 Variable overhead 2.0 4.0 10-30 Fixed overhead 3.0 6.0 2.0 4.0 Full cost 14.0 28.0 110 220 Sales price 15.5 290 115 _—-27.0 Profit per unit 15 10 (055.0 Required: (a) Calculate the optimal production plan (6) Calculate total contribution for the plan QUESTION-2 A company manufactures a component that is included in a final product that it also manufactures. Management has identified an external supplier who would be willing to supply the component. The variable cost of manufacturing the component internally is Rs. 10 and the external supplier would be prepared to supply the components for Rs. 13 each. It has been estimated that cash savings on general overhead expenditure will be Rs. 48,000 each year if internal production is ended. The company needs 10,000 units of the component each year. Required: Should the company make or buy the component? QUESTION-3 Wombat Company makes four products, W, X, Y and Z. All four products are made on the same machines, and the machine capacity for the year at Wombat’s factory is 3,500 hours However, it is able to obtain any of these products in unlimited quantities from a sub-contractor. Budgeted data is as follows. Product Ww xX Y Z Annual sales demand (units) 4,000 | 6,000 | 3,000 | 5,000 ; _ Rs Rs Rs Rs Sales price per unit 15 20 18 17. Variable cost per unit, in-house Manufacture 5 7 6 7 Cost of external purchase (outsourcing) 3 _18[ 105] ‘Machine hours per unit, in-house production 0.25 0.5 03 04} Required: Which items should be produced in-house and which should be outsourced? Scanned with CamScanner

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