Question from the Chartered Institute of Management Accountants, Stage 1, May 1995. (20 minutes) XYZ Limited currently
Question:
Question from the Chartered Institute of Management Accountants, Stage 1, May 1995. (20 minutes)
XYZ Limited currently produces two sizes of machines—the Minor and the Major. Various forecasts have been prepared for 1995 which are summarised below. hju8
Each unit of Major needs 1.5 times the amount of materials as a Minor and twice as much labour. Variable overheads are always absorbed in proportion to labour.
In the following year, 1996, it is proposed to launch a luxury version of the Major to be called the Major Plus. The Major Plus is expected to sell at £125 per unit and to have estimated direct unit costs of £24 materials and £17 labour and to increase fixed costs by £600,000 per year.
Step by Step Answer:
Management And Cost Accounting
ISBN: 9780130805478
1st Edition
Authors: Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, George Foster