Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company's production and packaging departments. The following data relate to the month of June: Division X Division Y R200.00 R190 Selling price per unit Direct

image text in transcribed

Company's production and packaging departments. The following data relate to the month of June: Division X Division Y R200.00 R190 Selling price per unit Direct labour: production at R7.50 per hour* R7.50 R15 Direct labour: packaging at R5 per hour* R12.50 R10 Other variable costs per unit R80.00 R45 Contribution R100.00 R120 * These are the actual hourly wages paid to the departments' employees. You may assume that the production and packaging departments incur no further variable costs. The total capacity available is 1 000 hours per month for production and 1 500 hours per month for packaging. The demand in June is 500 units of product X and 500 units of product Y. Owing to the capacity restrictions in the production and packaging departments, the company had to perform a linear programming exercise to determine the optimal mix o Product X and Product Y. It has shown that 334 units of Product X and 333 units of Product Y should be manufactured in June, and has indicated that the respective shadow prices should be R33.333 per hour for the production department and R26.667 per hour for the packaging department. Required: Calculate the optimal range of transfer prices for the transfer of the services of the production department and the packaging department respectively, to Divisions and Y

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_2

Step: 3

blur-text-image_3

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

Accounting History And The Rise Of Civilization, Volume II

Authors: Gary Giroux

1st Edition

163157793X, 9781631577932

More Books

Students also viewed these Accounting questions

Question

How can we confi rm both ourselves and others?

Answered: 1 week ago