Basic. A company manufactures two products A and B.

The budget statement below was produced using a traditional absorption costing approach. It shows the profit per unit for each product based on the estimated sales demand for the period.

It has now become apparent that the machine which is used to produce both products has a maximum capacity of 8000 hours and the estimated sales demand cannot be met in full. Total production costs tor the period, excluding direct material cost, are $248 000. No inventories are ‘held of either product.
Required:
(i) Calculate the return per machine hour for each product if a throughput accounting approach is used. (2 marks) (ii) Calculate the profit for the period, using a throughput accounting approach, assuming the company prioritises Product B. (3 marks)
CIMA P1 Performance Operations

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Selling price per unit Production costs per unit: Material costs Labour costs Overhead costs Profit per unit Product A Product B $ 46. 62 18 16 4 10 8 12 16 24 Additional information: Estimated sales demand (units) 6000 8000 Machine hours per unit 0.5 0.8