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A company producing products PIE and SIGMA using a single production process has the following cost data: Particulars PIE SIGMA Selling price per unit() 20
A company producing products PIE and SIGMA using a single production process has the following cost data: Particulars PIE SIGMA Selling price per unit() 20 30 Variable cost per unit () 16 Machine hours required per unit production (Hours) 1 2 Market limitation (units) 100000 250000 11 Total machine hours available: 4 lakhs. Fixed cost per annum: 26 lakhs. Considering the limiting factors of machine hours and market limitations, you are required to: (a) Indicate the best combination of products to give optimum contribution; (6) Show the additional machinery requirement to be augmented on rental basis at an annual rent of 1.5 lakhs per machine to provide additional capacity of 30,000 hours per machine; (c) Change in number of machines to be rented if the annual rental charges reduce to 1,25,000 per machine
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