Example 4: XYZ Itd is currently manufacturing 5000 units of the product 'XY100' annually, making full use of its machine capacity. The selling price and total costs per unit associated with "XY100' are as follows: 900 Selling Price per unit Costs per unit Direct Materials Variable machine operating costs R 100 per machine hour) Manufacturing overhead costs Marketing and administrative costs 200 150 180 200 730 Operating income per unit of 'XY 100' 3 170 XYZ Ltd can sell additional 3000 units of 'XY 100', if it can outsource those additional units. ABC Ltd., a supplier of quality products, has agreed to supply up to 6000 units of 'XY 100' per year at a price of 650 per unit delivered at XYZ's factory. XYZ limited can use its facility to produce an alternative product XY 2009. It can sell up to 12000 units of XY 200' annually. Estimated selling price and total costs per unit to manufacture and sell 12000 units of "XY 200' are as follows: 600 200 50 Selling price per unit Costs per unit Direct Materials Variable machine operating costs (Rs. 100 per machine hour) Manufacturing overhead costs Marketing and administrative costs 60 110 420 180 Operating income per unit of 'XY-200' Other information pertaining to the operation of XYZ Ltd. Is as follows: . XYZ Ltd. Use machine hours as the basis for assigning fixed manufacturing overhead. The fixed manufacturing overhead for the current year is 300000. These costs will not be affected by the product mix decision. . Variable marketing and administrative costs per unit for various products are as follows: XY100' Manufactured 80 "XY100' Purchased 40 "XY 2009 60 Manufactured [May 02] Fixed marketing and administrative costs for the current year is 600000. These costs will not be affected by the product-mix decision. Calculate the quantity of each product that xyz Ltd. Should manufacture and/or purchase to maximize operating income. Advanced Management Accounting (Costing & Q.T.) 7303 Example 4: XYZ Itd is currently manufacturing 5000 units of the product 'XY100' annually, making full use of its machine capacity. The selling price and total costs per unit associated with "XY100' are as follows: 900 Selling Price per unit Costs per unit Direct Materials Variable machine operating costs R 100 per machine hour) Manufacturing overhead costs Marketing and administrative costs 200 150 180 200 730 Operating income per unit of 'XY 100' 3 170 XYZ Ltd can sell additional 3000 units of 'XY 100', if it can outsource those additional units. ABC Ltd., a supplier of quality products, has agreed to supply up to 6000 units of 'XY 100' per year at a price of 650 per unit delivered at XYZ's factory. XYZ limited can use its facility to produce an alternative product XY 2009. It can sell up to 12000 units of XY 200' annually. Estimated selling price and total costs per unit to manufacture and sell 12000 units of "XY 200' are as follows: 600 200 50 Selling price per unit Costs per unit Direct Materials Variable machine operating costs (Rs. 100 per machine hour) Manufacturing overhead costs Marketing and administrative costs 60 110 420 180 Operating income per unit of 'XY-200' Other information pertaining to the operation of XYZ Ltd. Is as follows: . XYZ Ltd. Use machine hours as the basis for assigning fixed manufacturing overhead. The fixed manufacturing overhead for the current year is 300000. These costs will not be affected by the product mix decision. . Variable marketing and administrative costs per unit for various products are as follows: XY100' Manufactured 80 "XY100' Purchased 40 "XY 2009 60 Manufactured [May 02] Fixed marketing and administrative costs for the current year is 600000. These costs will not be affected by the product-mix decision. Calculate the quantity of each product that xyz Ltd. Should manufacture and/or purchase to maximize operating income. Advanced Management Accounting (Costing & Q.T.) 7303
