Question
Aldana Producers Inc. manufactures three types of chips: Banana, Cassava and Plantain. For the quarter ending 30 June 2020, the following information is provided: Limiting
Aldana Producers Inc. manufactures three types of chips: Banana, Cassava and Plantain. For the quarter ending 30 June 2020, the following information is provided:
| Details | Product A | Product B | Product C |
|---|---|---|---|
| Banana chips | Cassava chips | Plantain chips | |
| Revenue per unit | $800.00 | $720.00 | $640.00 |
| Direct labour per unit | $200.00 | $320.00 | $240.00 |
| Direct material per unit | $ 80.00 | $120.00 | $140.00 |
| Total market demand | 30,000 | 24,000 | 20,000 |
| Machine hours per unit | 0.50 | 0.25 | 0.40 |
There are 26,000 machine hours available during the quarter. Annual fixed costs are estimated at $12,480,000. Assume that fixed cost accrues evenly throughout the year.
Required:
(a) Calculate the optimal product mix for the quarter. [9 marks]
(b) Calculate the optimal profit for the quarter. [7 marks]
(c) Explain, giving two (2) examples, what a limiting factor is. [4 marks]
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
15th edition
978-0133428858, 133428850, 133428702, 978-0133428704
