Question 2 (13 marks) Two products are produced from a joint process AA and XX The result is 350 lbs of AA and 450 lbs of XX Before they can be sold they must be processed further at a cost of S280 for AA and S500 for XX The organization can only produce one batch per month The cost per batch is $160,000 The Demand varies with price charged as follows: Quantity Price/lb. Price/lb. XX 50 1400 100 1250 150 2000 1800 1600 1400 1200 200 250 1100 950 800 650 300 1000 350 800 400 350 200 450 The following analysis is prepared by the organization FC-160,000/8001bs-S200/lb Cost of AA-280-200 Cost of XX-500-200 -480 -700 Quantity AA REVAA COSTAA PROFIT Quantity XX RevXX Cost XX Profit 480 2000 1800 SO 100 700 700 100 1400 1250 1100 480 150 1600 480 150 200 76000 132000 168000 18-1000 INOXIDO 156000 112000 700 700 200 250 1400 1200 250 950 NOO 300 35000 55000 60000 50000 25000 - 15000 - 70000 -140000 -225000 480 480 480 1000 300 650 350 800 350 700 700 700 700 700 500 350 200 400 450 And as such the company sells 200 units af AA and 150 units of XX 3 marks 5 marks 5 marks How profitable will they be! How much should be sold - and how profitable would they be? How does the answer change if there is a disposal fee of S240/lb of unsold AA and S180/lb of unsold XX? Question 2 (13 marks) Two products are produced from a joint process AA and XX The result is 350 lbs of AA and 450 lbs of XX Before they can be sold they must be processed further at a cost of S280 for AA and S500 for XX The organization can only produce one batch per month The cost per batch is $160,000 The Demand varies with price charged as follows: Quantity Price/lb. Price/lb. XX 50 1400 100 1250 150 2000 1800 1600 1400 1200 200 250 1100 950 800 650 300 1000 350 800 400 350 200 450 The following analysis is prepared by the organization FC-160,000/8001bs-S200/lb Cost of AA-280-200 Cost of XX-500-200 -480 -700 Quantity AA REVAA COSTAA PROFIT Quantity XX RevXX Cost XX Profit 480 2000 1800 SO 100 700 700 100 1400 1250 1100 480 150 1600 480 150 200 76000 132000 168000 18-1000 INOXIDO 156000 112000 700 700 200 250 1400 1200 250 950 NOO 300 35000 55000 60000 50000 25000 - 15000 - 70000 -140000 -225000 480 480 480 1000 300 650 350 800 350 700 700 700 700 700 500 350 200 400 450 And as such the company sells 200 units af AA and 150 units of XX 3 marks 5 marks 5 marks How profitable will they be! How much should be sold - and how profitable would they be? How does the answer change if there is a disposal fee of S240/lb of unsold AA and S180/lb of unsold XX
