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Following information has been made available from the cost records of Honda Auto Bhd., manufacturing spare parts: Particulars Oil Cap Contact point Direct Material RM

Following information has been made available from the cost records of Honda Auto Bhd., manufacturing spare parts:

Particulars

Oil Cap

Contact point

Direct Material

RM 4

RM 5

Direct Labour

16 hours @ RM0.50 per hour

12 hours @ RM 0.50 per hour

Selling Price

RM 26

RM 24

Variable Overhead

150% of direct labour

Fixed Overhead

RM 750

The directors want to be acquainted with the desirability of adopting any one of the following alternative sales mixes in the budget for the next period:

  1. 150 units of Oil Cap and 350 units of Contact point

  2. 350 units of Oil Cap and 150 units of Contact point

  3. 400 units of Oil Cap and 100 units of Contact point

  4. 100 units of Oil Cap and 400 units of Contact point

  5. 250 units of Oil Cap and 250 units of Contact point

  6. 300 units of Oil Cap and 300 units of Contact point

  7. 500 units of Oil Cap only

  8. 500 units of Contact point only

REQUIRED;

(a) Compute the net profit for each of the above alternatives.

(b) Choose the best alternative for the management.

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