Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company produces two products, A and B , the production costs of which are shown below: A B K K Direct material cost 1

A company produces two products, A and B, the production costs of which are shown below:
A B
K K
Direct material cost 1010
Direct labour material cost 59
Variable overhead 59
Fixed overhead 59
Total production cost 2537
Fixed overhead is absorbed on the basis of direct labour cost.The products pass through two processes,Y and Z,with associated labour cost of K40,000 per direct labour hour in each.The direct labour associated with the two products during these processes is shown below:
Process Time Taken
Product A Product B
Y 10 mins 39 mins
Z 20 mins 15 mins
Selling prices are set by the market,the current market price for A being K65 and that for B K25. At these prices, the market will absorb a many units of Aand B as the company can produce. The ability of the company to produce A and B is limited by the capacity to process the products in Y and Z.The company operates a two-shiftsystem,giving 16 working hours per day.Process Z is a single-process line, and for technical reasons this line can only be operated for a maximum of 12 hours per day.Process Y is a dual processline,and thus two units can be processed simultaneously, although this douuubles the requirement for labour. Process Y operates for the full 16 working hours each day.
You are required to: Based on the above information,what production plan should the company follow in order to maximize profit?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

15th edition

1337272124, 978-1337515504, 1337515507, 978-1337272155, 978-1337272124

More Books

Students also viewed these Accounting questions

Question

Define positive thinking and cite its benefits.

Answered: 1 week ago