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WYE 26 7120 21 90 (10 hrs * 3.60) = ? 36 3182 375 165 WYE 23,333 units (1,75,000 hrs -7.5 hrs pu) (2,80,000 hrs = 10 hrs pu) = 28,000 units 23,333 units 2 (23,333 unitsx 165 pu) = 38,49,945 Padukas - Students' Handbook on Strategic Cost Management & Performance Evaluation - CA Final EXE Particulars 3 Direct Materials (c) Variane Cost of Department 2: Direct Labour Variable OH (7.S hrs 3.60) = 327 Total VC In Department-2 138 3256 (0) Total Variable Cost per unit (b + c) 117 Contribution per unit (a -d) 2. Computation of Quantity to be produced and Profit using internal facilities only Particulars EXE (a) Maximum Possible Production in Dept - 1 (1,75,000 hrs = 5 hrs pu) 35,000 units (b) Maximum Possible Production in Dept (2,80,000 hrs: 7.5 hrs pu) = 37,333 units (c) Maximum Production using the available hours in both Departments Least of (a) and (b) 35,000 units (d) Maximum Possible Contribution (35,000 unitsx 117 pu) = (Quantity as per (c)x Contribution pu) = 340,95,000 Decision: Intemal Production of EXE gives the Maximum Contribution to the Company. The resultant Maximum Profil Contribution 40,95,000 - Fixed Prod OH 15,00,000 = 25,95,000. 3. Sub-Contracting Options available to the Company EXE = 38,500 units WYE = 31,500 units Own Production Sub-Contract Dept Own Production (maximum) (WN 2a) 1 38,500 - 35,000 = (maximum) (WN 2a) 1 35,000 units 3,500 units (bal.fig) 23,333 units Sub-Contract 31,500 23,333 = 8,167 units (bal.fig) Dept 23,333 units 4,667 units 3,500 units 31,500 units WYE 3540 193 182 212 192 3,500 units 23,333 + 4,667 (0/0) 1,167 units 35,000 + 2,333 (b) 2. (i.e.8,16744,667) uts = 28,000 units 2 (i.e.3,500-2,333) uts = 37,333 units (maximum) (WN 2b) (maximum) (WN 2b) Effect of above decision: Effect of above decision: (a) Own Production (Dept 1 & 2) 35,000 units (a) Own Production (Dept 1 & 2) (b) Sub-Contracting Dept 1 only 2,333 units (b) Sub-Contracting Dept 1 only (c) Sub-Contracting Dept 1 & 2 1,167 units (C) Sub-Contracting Dept 1 & 2 Total Total 38,500 units 4. Profit Statement using Sub-Contracting Facilities as per above options Particulars EXE 375 (a) Selling Price per unit (b) Own VC per unit in Department 1 (WN 1b) * 120 (c) Own VC per unit in Department 2 (WN 1c) 138 (d) Sub-Contract Cost per unit in Department 1 138 (e) Sub-Contract Cost per unit in Department 2 150 ( Contribution per unit in case of - Own Prodn in both Dept 1 & 2 (a-b-c) 117 Sub-Cont Dept 1 & Own Prodn Dept 2 (a-d-c) 99 Sub-Contract in both Dept 1 and 2 (a-d-e) 87 (9) Total Contribution Earned Own Prodn in both Dept 1 & 2 (35,000 utsx 117)= 40,95,000 (23,333 utsx3165)= 38,49,90 Sub-Cont. Dept 1 & Own Prodn Dept 2 (2,333 uts x 99) = 2,30,967 (4,667 utsx 146) = 6,81,3 Sub-Contract in both Dept 1 and 2 (1,167 uts x 87)= ? 1,01,529 (3,500 uts x 136) = 4,76, Total of above Contribution 44,27,496 50,07, 165 3146 136 9.136 ) Manufactured Sw) Manufactured 600 c) Purchased X La satisfied - Set Hansen Strateg Cost Management a Performance Evaluation - CA Final They can acts to produce an alternative product XY 200" It can sell upto 12,000 units of "XY 2004 y Ed She and Total Costs per unit of manufacture and sale of 12,000 units of "XY 200 are as follows Particulars Selling Price per unit 200 Cash per un Direct Materials 50 Variable Machine Operating Cost ( 100 per hour) 60 Manufacturing Overhead Costs Marketing and Administrative Costs 110 Operating Income per unit of "XY 200" Other information pertaining to the operations of the Company is as under- Overheads for the current year is 23,00,000. These costs will not be affected by the product mix decision. Purchased "XY 100" = 40, (c) Manufactured "XY 200" = 7 60. 420 180 11.12 Movak Siddhivi d B. the ma in Deps ment. Pro The Company uses machine hours as the basis of assigning Fixed Manufacturing OH. The Fixed Manufacturing Variable Marketing and Administrative Costs per unit for various products are: (a) Manufactured "XY 100" = 80,0) Direct Mater Faxed Marketing and Administrative Costs for the current year is 26,00,000. These costs will not be affected by the product mix decision. Fixed OHA "XY 200" 23,00,000 12,000 units 3253 60 35 if the Co from as ca Solu "XY 2009 3600 35 Calculate the quantity of each product that the Company should manufacture and / or purchase, to maximize its Operating Income. Solution: 1. Segregation of Variable and Fixed Manufacturing OH "XY 100" Particulars 33,00,000 (a) Budgeted Fixed Manufacturing Overheads (given) 5,000 units (b) Budgeted Output Quantity 60 (c) Foxed Manufacturing OH per unit (a) + (b) 180 (d) Total Manufacturing OH per unit (given) 120 (e) Hence, Variable Manufacturing OH (d) - C 2. Computation of Contribution per Machine Hour on own production "XY 100" Particulars 3 900 (a) Selling Price per unit (b) Variable Costs per unit 200 200 Direct Materials 120 Variable Manufacturing Overheads (as per WN 1) 150 50 Variable Machine Operating costs (at 100 p.h.) 80 Variable Marketing and Administrative Costs 550 Total Variable Costs p.u. 350 (c) Contribution per unit 350 - 100 = 0.5 hours * 150 = 100 = 1.5 hours (d) Machine Hours required per unit 233.33 510.00 (e) Contribution per Machine Hour ( cd) II (1) Ranking for own production (g) Maximum Production 5,000+3,000 = 8,000 units 12,000 un (h) Machine Hours required for maximum prodn (g x d) 12,000 hours 6,000 ho (i) Allocation of Machine Hrs (5000 1.5 = 7,500 hrs) (bal. fig) 1,500 hours 6,000 h Note: It is given that the present production of "XY 100" 5,000 units, utilises the full machine capacity. Hence, machine capacity = 5,000 units x 1.5 = 7,500 machine hours only, which is allocated as above. 60 345 255 3. Computation of Contribution on Purchase and Sale of "XY 100" Contribution p.u. = Selling Price - Variable Purchase Costs - Variable Marketing and Administrative Costs = 900 - 650 - 40 = 210 per unit. As Contribution p.u. on own production of "XY 100" is higher (* 350 p.u.), the Company should initially prefer many and sale of "XY 100". If the demand of "XY 100" is not fully met by own production, purchasing from ABC Ltd is pern 9.132 Total) 2.34,00,000 a) Releu - Shan State Cost Manponent & Performance Evaluation - CA Final 1. Pronabunty Statement as Bugeted (Output 1,80,000 units) Pastars Computation Per Unit() 1.80,000 units 130 130.00 54,00,000 12,96,000 50,40,000 21,60,000 21,60,000 1,60,56,000 73,44,000 b) Re 30.00 1.80,000 units x 30 7.20 1,80.000 units 7.20 EN) Next 1,80,000 units 4 hours 7 per hour 28.00 how 1,80,000 units 24 x 50% 12.00 WOW 1,80,000 units X 16 75% 12.00 TW Costs 91.40 Contribution 38.60 Costs Com EM (Fed Portion) * 33,000 for 15,000 units, so for 1,80,000 units 2.20 ay ON 1,80,000 units x 724 x 50% Atministrate OH 1,80,000 units x 5 S & Distribution On 1,80,000 units x 16 x 2596 Fests Buched Profit Note: Verble Chest er en for 15,000 units - Materials ? 30,000 + Labour 52,500 + Variable OH ? 25,500 = ? 1,08,000 Svarble Cost per unit 1,08,000 = 7.20 per unit. 15,000 units 3,96,000 21,60,000 9,00,000 7,20,000 41,76,000 31,68,000 7,20,000 hours 80,000 hours 60,000 hours Opp. Cost = Nil : -32/m. 56 70 3 1 11 2. Evaluation of Export Offer a) Present Capacity utilized (given as 90% of Total) = 1,80,000 units x 4 hours = (DS Balance Uudised Capacity = (7,20,000 - 90%) - 10% = Time required for Export Offer of 53 Grade = 500 units x12 months x 10 hours (a) Since the time required is within the spare capacity, there is no Opportunity Cost for Export Offer. (e) Relevant Costs per unit of 53 Grade: Direct Materials = Given Direct Labour = 10 hours x 7 per hour Variable Factory OH = 10 hours *3 per hour) Selling & Distribution OH = Given Total Relevant Costs per unit of 53 Grade Selling Price per unit of 53 Grade (Given) (9) Net Contribution per unit of 53 Grade (f-e) (h) Total Additional Contribution from Export Offer = 5 x 6000 units Decision: The Export Offer may be accepted, due to availability of capacity and additional contribution. 1 * 30,0 3. Make vs Buy of Component EH Since Relevant Cost of Make (i.e. Variable Cost 7.20 as per Note in WN 1) is less than Cost of Buy (given) 7.90 advisable to make Component EH internally. 4. Evaluation of Spare Capacity in Make or Buy Computation of Time Required Component EN (a) Total Wages (Given) 52,500 (b) No. of units (Given) 15,000 (C) Hence Wages Cost per unit (a + b) 3.50 (d) Wage Rate (presumed) 7 per hour (e) Hence DLH required per unit (C = d) 0.5 hours Capacity released by purchase of Component EH = 0.5 hours x 1,80,000 units Possible Production of GYP in 90,000 hours = 90,000 = 0.3 Component * 31,500 15,000 7 2.10 7 per hc 0.3 hou = 90,000 hours = 3,00,000 un 9.120 N 17 Product 500 190 120 AS Company produces the products Y Z by using indigenous and imported Raw Materials. The relevant information 36 2,500 2,500 24 Pads Hard on Strategy Cost Management Performance Faluation - CA Final A Marginal Casting - Key Factor - Production Decision ve from the records of the Company is as under: Particulars Product X Product Y Selling Printper and 425 380 Chic Materials per un 180 160 Die Labour 40 per hour 100 80 Varude Overheads @ 12 per Labour Hour 30 Maximum Sales Potential on units) 1,500 The Company also has an agreement to supply 1,000 units of Product X to a Vendor which has to be executed. Out of Direct kg. Prepare a statement showing Contribution of these three products assuming availability of Imported Raw Materials is restricted to 24.000 kgs per year. Z 190 ? 114 4.75 kg 3 500 154 32.42 I Total 2,500 units 1. Ranking Priority Solution: X Y Particulars 180 7160 (a) Total Direct Material Cost pu 796 108 (0) Value of Imported Material (60% of a) 4.5 kg 4 kg Corty of Imported Material reqd pu (b: 24/kg) 3 425 380 (0) Selling Price pu 190+120+36=2346 160+80+24=? 264 180+100+30=2310 (e) Variable Costs pu Matenal + Labour + VOH 115 116 (1) Contribution pu (de) 29.00 25.56 (9) Contribution per kg of Imported Material (f =c) III II (h) Rank (when Imported Material is Key Factor) 2. Production Decision when Imported Material Available = 24,000 kg Z Particulars Y (a) Maximum Sales Quantity 1,500 units 2,500 units (b) Qtty of Imported Material reqd pu (WN 1c) 4.5 kg 4 kg 4.75 kg (c) Maximum Imported Material required (axb) 6,750 kg 10,000 kg 11,875 kg 28,625 (d) Allocation of Imported Matl as per Conditions 1,000 x 4.5 - Compulsory Allocation to meet "X" reqment = 4,500 kg - Balance Allocation as per Ranks 7,625 kg 11,875 kg Total Allocation of Imported Material 4,500 kg 7,625 kg 11,875 kg (e) Quantity of Product produced (d = b) 1,000 units 1,906.25 units 2,500 units Contribution per unit (WN 1f) 115 116 154 (9) Maximum Contribution (e xf) 1,15,000 2,21,125 73,85,000 4,500 19,500 24,000 7,21, CE 10.11 Multiple Key Factor - Single Product decision and Effect of Hiring Out Capacity Modhak Company manufactures two products. Each product passes through two departments A and B before it becom finished product. The data for a year are as under- Aristocrat Products 7,400 1. Maximum Sales Potential in units 2. Product unit data: 90 Selling Price per unit 0.3 Machine Hours per unit: 0.50 Hours Department A Department B 0.40 Hours 0.4 3. Maximum Capacity of Department A is 3,400 hours and of Department B is 3,840 hours. 4. Maximum quantity of Direct Materials available is 17,000 kg. Each product requires 2 kg of Direct Mater Purchase Price of the Direct Materials is 5 per kg. 5. Variable Costs are budgeted at 50 per hour for Department A and 60 per hour for Department B. 9.108 WYE 26 7120 21 90 (10 hrs * 3.60) = ? 36 3182 375 165 WYE 23,333 units (1,75,000 hrs -7.5 hrs pu) (2,80,000 hrs = 10 hrs pu) = 28,000 units 23,333 units 2 (23,333 unitsx 165 pu) = 38,49,945 Padukas - Students' Handbook on Strategic Cost Management & Performance Evaluation - CA Final EXE Particulars 3 Direct Materials (c) Variane Cost of Department 2: Direct Labour Variable OH (7.S hrs 3.60) = 327 Total VC In Department-2 138 3256 (0) Total Variable Cost per unit (b + c) 117 Contribution per unit (a -d) 2. Computation of Quantity to be produced and Profit using internal facilities only Particulars EXE (a) Maximum Possible Production in Dept - 1 (1,75,000 hrs = 5 hrs pu) 35,000 units (b) Maximum Possible Production in Dept (2,80,000 hrs: 7.5 hrs pu) = 37,333 units (c) Maximum Production using the available hours in both Departments Least of (a) and (b) 35,000 units (d) Maximum Possible Contribution (35,000 unitsx 117 pu) = (Quantity as per (c)x Contribution pu) = 340,95,000 Decision: Intemal Production of EXE gives the Maximum Contribution to the Company. The resultant Maximum Profil Contribution 40,95,000 - Fixed Prod OH 15,00,000 = 25,95,000. 3. Sub-Contracting Options available to the Company EXE = 38,500 units WYE = 31,500 units Own Production Sub-Contract Dept Own Production (maximum) (WN 2a) 1 38,500 - 35,000 = (maximum) (WN 2a) 1 35,000 units 3,500 units (bal.fig) 23,333 units Sub-Contract 31,500 23,333 = 8,167 units (bal.fig) Dept 23,333 units 4,667 units 3,500 units 31,500 units WYE 3540 193 182 212 192 3,500 units 23,333 + 4,667 (0/0) 1,167 units 35,000 + 2,333 (b) 2. (i.e.8,16744,667) uts = 28,000 units 2 (i.e.3,500-2,333) uts = 37,333 units (maximum) (WN 2b) (maximum) (WN 2b) Effect of above decision: Effect of above decision: (a) Own Production (Dept 1 & 2) 35,000 units (a) Own Production (Dept 1 & 2) (b) Sub-Contracting Dept 1 only 2,333 units (b) Sub-Contracting Dept 1 only (c) Sub-Contracting Dept 1 & 2 1,167 units (C) Sub-Contracting Dept 1 & 2 Total Total 38,500 units 4. Profit Statement using Sub-Contracting Facilities as per above options Particulars EXE 375 (a) Selling Price per unit (b) Own VC per unit in Department 1 (WN 1b) * 120 (c) Own VC per unit in Department 2 (WN 1c) 138 (d) Sub-Contract Cost per unit in Department 1 138 (e) Sub-Contract Cost per unit in Department 2 150 ( Contribution per unit in case of - Own Prodn in both Dept 1 & 2 (a-b-c) 117 Sub-Cont Dept 1 & Own Prodn Dept 2 (a-d-c) 99 Sub-Contract in both Dept 1 and 2 (a-d-e) 87 (9) Total Contribution Earned Own Prodn in both Dept 1 & 2 (35,000 utsx 117)= 40,95,000 (23,333 utsx3165)= 38,49,90 Sub-Cont. Dept 1 & Own Prodn Dept 2 (2,333 uts x 99) = 2,30,967 (4,667 utsx 146) = 6,81,3 Sub-Contract in both Dept 1 and 2 (1,167 uts x 87)= ? 1,01,529 (3,500 uts x 136) = 4,76, Total of above Contribution 44,27,496 50,07, 165 3146 136 9.136 ) Manufactured Sw) Manufactured 600 c) Purchased X La satisfied - Set Hansen Strateg Cost Management a Performance Evaluation - CA Final They can acts to produce an alternative product XY 200" It can sell upto 12,000 units of "XY 2004 y Ed She and Total Costs per unit of manufacture and sale of 12,000 units of "XY 200 are as follows Particulars Selling Price per unit 200 Cash per un Direct Materials 50 Variable Machine Operating Cost ( 100 per hour) 60 Manufacturing Overhead Costs Marketing and Administrative Costs 110 Operating Income per unit of "XY 200" Other information pertaining to the operations of the Company is as under- Overheads for the current year is 23,00,000. These costs will not be affected by the product mix decision. Purchased "XY 100" = 40, (c) Manufactured "XY 200" = 7 60. 420 180 11.12 Movak Siddhivi d B. the ma in Deps ment. Pro The Company uses machine hours as the basis of assigning Fixed Manufacturing OH. The Fixed Manufacturing Variable Marketing and Administrative Costs per unit for various products are: (a) Manufactured "XY 100" = 80,0) Direct Mater Faxed Marketing and Administrative Costs for the current year is 26,00,000. These costs will not be affected by the product mix decision. Fixed OHA "XY 200" 23,00,000 12,000 units 3253 60 35 if the Co from as ca Solu "XY 2009 3600 35 Calculate the quantity of each product that the Company should manufacture and / or purchase, to maximize its Operating Income. Solution: 1. Segregation of Variable and Fixed Manufacturing OH "XY 100" Particulars 33,00,000 (a) Budgeted Fixed Manufacturing Overheads (given) 5,000 units (b) Budgeted Output Quantity 60 (c) Foxed Manufacturing OH per unit (a) + (b) 180 (d) Total Manufacturing OH per unit (given) 120 (e) Hence, Variable Manufacturing OH (d) - C 2. Computation of Contribution per Machine Hour on own production "XY 100" Particulars 3 900 (a) Selling Price per unit (b) Variable Costs per unit 200 200 Direct Materials 120 Variable Manufacturing Overheads (as per WN 1) 150 50 Variable Machine Operating costs (at 100 p.h.) 80 Variable Marketing and Administrative Costs 550 Total Variable Costs p.u. 350 (c) Contribution per unit 350 - 100 = 0.5 hours * 150 = 100 = 1.5 hours (d) Machine Hours required per unit 233.33 510.00 (e) Contribution per Machine Hour ( cd) II (1) Ranking for own production (g) Maximum Production 5,000+3,000 = 8,000 units 12,000 un (h) Machine Hours required for maximum prodn (g x d) 12,000 hours 6,000 ho (i) Allocation of Machine Hrs (5000 1.5 = 7,500 hrs) (bal. fig) 1,500 hours 6,000 h Note: It is given that the present production of "XY 100" 5,000 units, utilises the full machine capacity. Hence, machine capacity = 5,000 units x 1.5 = 7,500 machine hours only, which is allocated as above. 60 345 255 3. Computation of Contribution on Purchase and Sale of "XY 100" Contribution p.u. = Selling Price - Variable Purchase Costs - Variable Marketing and Administrative Costs = 900 - 650 - 40 = 210 per unit. As Contribution p.u. on own production of "XY 100" is higher (* 350 p.u.), the Company should initially prefer many and sale of "XY 100". If the demand of "XY 100" is not fully met by own production, purchasing from ABC Ltd is pern 9.132 Total) 2.34,00,000 a) Releu - Shan State Cost Manponent & Performance Evaluation - CA Final 1. Pronabunty Statement as Bugeted (Output 1,80,000 units) Pastars Computation Per Unit() 1.80,000 units 130 130.00 54,00,000 12,96,000 50,40,000 21,60,000 21,60,000 1,60,56,000 73,44,000 b) Re 30.00 1.80,000 units x 30 7.20 1,80.000 units 7.20 EN) Next 1,80,000 units 4 hours 7 per hour 28.00 how 1,80,000 units 24 x 50% 12.00 WOW 1,80,000 units X 16 75% 12.00 TW Costs 91.40 Contribution 38.60 Costs Com EM (Fed Portion) * 33,000 for 15,000 units, so for 1,80,000 units 2.20 ay ON 1,80,000 units x 724 x 50% Atministrate OH 1,80,000 units x 5 S & Distribution On 1,80,000 units x 16 x 2596 Fests Buched Profit Note: Verble Chest er en for 15,000 units - Materials ? 30,000 + Labour 52,500 + Variable OH ? 25,500 = ? 1,08,000 Svarble Cost per unit 1,08,000 = 7.20 per unit. 15,000 units 3,96,000 21,60,000 9,00,000 7,20,000 41,76,000 31,68,000 7,20,000 hours 80,000 hours 60,000 hours Opp. Cost = Nil : -32/m. 56 70 3 1 11 2. Evaluation of Export Offer a) Present Capacity utilized (given as 90% of Total) = 1,80,000 units x 4 hours = (DS Balance Uudised Capacity = (7,20,000 - 90%) - 10% = Time required for Export Offer of 53 Grade = 500 units x12 months x 10 hours (a) Since the time required is within the spare capacity, there is no Opportunity Cost for Export Offer. (e) Relevant Costs per unit of 53 Grade: Direct Materials = Given Direct Labour = 10 hours x 7 per hour Variable Factory OH = 10 hours *3 per hour) Selling & Distribution OH = Given Total Relevant Costs per unit of 53 Grade Selling Price per unit of 53 Grade (Given) (9) Net Contribution per unit of 53 Grade (f-e) (h) Total Additional Contribution from Export Offer = 5 x 6000 units Decision: The Export Offer may be accepted, due to availability of capacity and additional contribution. 1 * 30,0 3. Make vs Buy of Component EH Since Relevant Cost of Make (i.e. Variable Cost 7.20 as per Note in WN 1) is less than Cost of Buy (given) 7.90 advisable to make Component EH internally. 4. Evaluation of Spare Capacity in Make or Buy Computation of Time Required Component EN (a) Total Wages (Given) 52,500 (b) No. of units (Given) 15,000 (C) Hence Wages Cost per unit (a + b) 3.50 (d) Wage Rate (presumed) 7 per hour (e) Hence DLH required per unit (C = d) 0.5 hours Capacity released by purchase of Component EH = 0.5 hours x 1,80,000 units Possible Production of GYP in 90,000 hours = 90,000 = 0.3 Component * 31,500 15,000 7 2.10 7 per hc 0.3 hou = 90,000 hours = 3,00,000 un 9.120 N 17 Product 500 190 120 AS Company produces the products Y Z by using indigenous and imported Raw Materials. The relevant information 36 2,500 2,500 24 Pads Hard on Strategy Cost Management Performance Faluation - CA Final A Marginal Casting - Key Factor - Production Decision ve from the records of the Company is as under: Particulars Product X Product Y Selling Printper and 425 380 Chic Materials per un 180 160 Die Labour 40 per hour 100 80 Varude Overheads @ 12 per Labour Hour 30 Maximum Sales Potential on units) 1,500 The Company also has an agreement to supply 1,000 units of Product X to a Vendor which has to be executed. Out of Direct kg. Prepare a statement showing Contribution of these three products assuming availability of Imported Raw Materials is restricted to 24.000 kgs per year. Z 190 ? 114 4.75 kg 3 500 154 32.42 I Total 2,500 units 1. Ranking Priority Solution: X Y Particulars 180 7160 (a) Total Direct Material Cost pu 796 108 (0) Value of Imported Material (60% of a) 4.5 kg 4 kg Corty of Imported Material reqd pu (b: 24/kg) 3 425 380 (0) Selling Price pu 190+120+36=2346 160+80+24=? 264 180+100+30=2310 (e) Variable Costs pu Matenal + Labour + VOH 115 116 (1) Contribution pu (de) 29.00 25.56 (9) Contribution per kg of Imported Material (f =c) III II (h) Rank (when Imported Material is Key Factor) 2. Production Decision when Imported Material Available = 24,000 kg Z Particulars Y (a) Maximum Sales Quantity 1,500 units 2,500 units (b) Qtty of Imported Material reqd pu (WN 1c) 4.5 kg 4 kg 4.75 kg (c) Maximum Imported Material required (axb) 6,750 kg 10,000 kg 11,875 kg 28,625 (d) Allocation of Imported Matl as per Conditions 1,000 x 4.5 - Compulsory Allocation to meet "X" reqment = 4,500 kg - Balance Allocation as per Ranks 7,625 kg 11,875 kg Total Allocation of Imported Material 4,500 kg 7,625 kg 11,875 kg (e) Quantity of Product produced (d = b) 1,000 units 1,906.25 units 2,500 units Contribution per unit (WN 1f) 115 116 154 (9) Maximum Contribution (e xf) 1,15,000 2,21,125 73,85,000 4,500 19,500 24,000 7,21, CE 10.11 Multiple Key Factor - Single Product decision and Effect of Hiring Out Capacity Modhak Company manufactures two products. Each product passes through two departments A and B before it becom finished product. The data for a year are as under- Aristocrat Products 7,400 1. Maximum Sales Potential in units 2. Product unit data: 90 Selling Price per unit 0.3 Machine Hours per unit: 0.50 Hours Department A Department B 0.40 Hours 0.4 3. Maximum Capacity of Department A is 3,400 hours and of Department B is 3,840 hours. 4. Maximum quantity of Direct Materials available is 17,000 kg. Each product requires 2 kg of Direct Mater Purchase Price of the Direct Materials is 5 per kg. 5. Variable Costs are budgeted at 50 per hour for Department A and 60 per hour for Department B. 9.108