Question
1 (6 Marks) Ahsan Inc. produces four products A, B, C and D in its factory. Per unit product costs are given below: A B
1 (6 Marks) Ahsan Inc. produces four products A, B, C and D in its factory. Per unit product costs are given below: A B C D Direct materials Rs.14.30 Rs.10.20 Rs.11.00 Direct labour 19.40 27.40 33.60 Rs.10.60 40.40 Variable manufacturing overhead 4.30 2.70 2.60 3.20 Fixed manufacturing overhead 26.50 34.80 26.60 37.20 Unit product cost Rs.64.50 Rs.75.10 Rs.73.80 Rs.91.40 Some further information in relation to the products is as follows: Cutting minutes per unit Selling price per unit Variable selling cost per unit A 3.80 B C D 4.30 Demand in units per month Rs.76.10 Rs.2.20 4,000 5.30 Rs.93.50 Rs.97.00 Rs.104.20 Rs.1.20 Rs.3.30 Rs.1.60 4,000 3,000 2,000 3.40 It is considered that the Cutting machines are the constraint in the production facility. The total minutes available for Cutting on these machines are 53,600. Required a) If the company is to make the best use of the existing Cutting machine capacity, what is the rank order for the manufacturing of the products? (e.g. If you want to make 'A' first, its rank would be 1, others 2,3 and 4 in order of preference) [4 Marks] b) Up to how much should the company be willing to pay for one additional minute of Cutting machine time? (Round off to two decimal places) [2 Marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started