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The statement below relates to the costs and selling price of a unit of three products produced by a company:
Additional information provided:
Labour rate per hour for all the products is GH¢8
Demand for the year in units: A – 4,000; B – 2,500; C – 3,600
Available labour hours: 65,000
Required:
i) Prepare a production plan that will maximize profit using the throughput approach.
(9 marks)
ii) Calculate the Through Put Accounting Ratio for each product assuming that the conversion
cost is based on the annual demand.
(6 marks)
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Blasius Ltd is a leading manufacturer of furniture in Ghana. The company manufactures these three garden furniture products – chair, bench, and table. The budgeted unit cost and resource requirements of each of these items are detailed below:
| Product | Chair (GH¢) | Bench (GH¢) | Table (GH¢) |
|---|---|---|---|
| Timber cost | 5.00 | 15.00 | 10.00 |
| Direct labour cost | 4.00 | 10.00 | 8.00 |
| Variable overhead cost | 3.00 | 7.50 | 6.00 |
| Fixed overhead cost | 4.50 | 11.25 | 9.00 |
| Total Cost | 16.50 | 43.75 | 33.00 |
Budgeted volumes per annum:
| Product | Quantity |
|---|---|
| Chair | 3,500 |
| Bench | 1,900 |
| Table | 1,350 |
These volumes are believed to equal the market demand for these products. Fixed overhead costs are attributed to the three products on the basis of direct labour hours. The cost of the timber is GH¢2.00 per square metre.
The products are made from a specialized timber. A memo from the purchasing manager advises you that because of a problem with the supplier, this specialized timber is limited in supply to 20,000 square metres per annum.
The sales director has already accepted an order for 500 chairs, 100 benches, and 150 tables which, if not supplied, would incur a financial penalty of GH¢2,000. These quantities are NOT included in the market demand estimates above.
The selling prices of the three products are:
| Product | Selling Price (GH¢) |
|---|---|
| Chair | 20.00 |
| Bench | 50.00 |
| Table | 40.00 |
Required:
a) Determine the optimum production plan and state the total contribution that this would yield. (10 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The statement below relates to the costs and selling price of a unit of three products produced by a company:
Additional information provided:
Labour rate per hour for all the products is GH¢8
Demand for the year in units: A – 4,000; B – 2,500; C – 3,600
Available labour hours: 65,000
Required:
i) Prepare a production plan that will maximize profit using the throughput approach.
(9 marks)
ii) Calculate the Through Put Accounting Ratio for each product assuming that the conversion
cost is based on the annual demand.
(6 marks)
Find Related Questions by Tags, levels, etc.
Blasius Ltd is a leading manufacturer of furniture in Ghana. The company manufactures these three garden furniture products – chair, bench, and table. The budgeted unit cost and resource requirements of each of these items are detailed below:
| Product | Chair (GH¢) | Bench (GH¢) | Table (GH¢) |
|---|---|---|---|
| Timber cost | 5.00 | 15.00 | 10.00 |
| Direct labour cost | 4.00 | 10.00 | 8.00 |
| Variable overhead cost | 3.00 | 7.50 | 6.00 |
| Fixed overhead cost | 4.50 | 11.25 | 9.00 |
| Total Cost | 16.50 | 43.75 | 33.00 |
Budgeted volumes per annum:
| Product | Quantity |
|---|---|
| Chair | 3,500 |
| Bench | 1,900 |
| Table | 1,350 |
These volumes are believed to equal the market demand for these products. Fixed overhead costs are attributed to the three products on the basis of direct labour hours. The cost of the timber is GH¢2.00 per square metre.
The products are made from a specialized timber. A memo from the purchasing manager advises you that because of a problem with the supplier, this specialized timber is limited in supply to 20,000 square metres per annum.
The sales director has already accepted an order for 500 chairs, 100 benches, and 150 tables which, if not supplied, would incur a financial penalty of GH¢2,000. These quantities are NOT included in the market demand estimates above.
The selling prices of the three products are:
| Product | Selling Price (GH¢) |
|---|---|
| Chair | 20.00 |
| Bench | 50.00 |
| Table | 40.00 |
Required:
a) Determine the optimum production plan and state the total contribution that this would yield. (10 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
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