Company Golden Ltd$.$ is a manufacturing company producing two products K$1$ and K$2.$ The production data of the last month is as followed:

Total

K$1$

K$2$

Production

$15,000$ units

$12,000$ units

$3,000$ units

Direct material

$6000$ kg at $$2$ per kg

$1,000$ kg at $$3$ per kg

Direct labors

$20,000$ hrs at $$10$ per hr

Factory Rent

$$8,000$

Machine Depreciation

$$10,000$

Heating and Gas

$$8,000$

Electricity

$$4,000$

Machine Hours

$25,000$ hrs

Machine hours and labor hours are allocated based on the number of units produced.

Required:

$1.$ Calculate the budgeted overhead absorption rate for each product based on machine hour?

$2.$ For next month, the company is expecting to produce and sell $13,500$ K$1$ units, $4,500$ K$2$ units and incurring $28,500$ machine hours. Calculate the unit cost for each product.

$3.$ What should the price of K$1$ and K$2$ be if the company wants to achieve a gross margin

of $15\%?$

$4.$ The company is considering a new strategy of reducing the price by $5\%$ and spending $$8,000$ on marketing. The director thinks this strategy can boost the sale volume of May by $12\%$; production can increase to meet the increased volume at no additional cost. What is your recommendation?

$5.$ If the materials supplied are limited at $8000$ kg per month, what is the product mix for the company in order to maximize profit?

Q$4$: Allen$$s Attractions, Inc., is considering the purchase of new video games to place in its stores. The games would cost a total of $$480,000,$ have an three$-$year useful life, and have a total salvage value of $$4,000.$ The company estimates that annual revenues and

expenses associated with the games would be as follows:

What is the payback period for the new video game?

What is the IRR of this project? If the company require an IRR of $7\%$ will the game be purchased?Q$3$: Company Golden Ltd$.$ is a manufacturing company producing two products $K1$ and $K2.$ The

production data of the last month is as followed:

Machine hours and labor hours are allocated based on the number of units produced.

Required:

Calculate the budgeted overhead absorption rate for each product based on machine hour?

For next month, the company is expecting to produce and sell $13,500K1$ units, $4,500K2$ units and

incurring $28,500$ machine hours. Calculate the unit cost for each product.

What should the price of $K1$ and $K2$ be if the company wants to achieve a gross margin

of $15\%?$

The company is considering a new strategy of reducing the price by $5\%$ and spending $$8,000$ on

marketing. The director thinks this strategy can boost the sale volume of May by $12\%$; production can

increase to meet the increased volume at no additional cost. What is your recommendation?

If the materials supplied are limited at $8000kg$ per month, what is the product mix for the company in

order to maximize profit?

Q$4$: Allen's Attractions, Inc., is considering the purchase of new video games to place in its stores. The

games would cost a total of $$480,000,$ have an three$-$year useful life, and have a total salvage value of

$$4,000.$ The company estimates that annual revenues and

expenses associated with the games would be as follows:

What is the payback period for the new video game?

What is the IRR of this project? If the company require an IRR of $7\%$ will the game be purchased?