Question 4

Uni plc manufactures 2 cleaning products, A and B. Selling price and cost information (Per Unit) is as follows:

ECON3421-WE01

Item	Product A	Product B
Selling price	50	56
Materials	16	40
Labour	10	4
Other variable costs	14	4
Fixed costs	6	4
Total costs	46	52
Profit	4	4

Additional information

1. Machine hours Per Unit: 2 hrs product A and 1 hr product B.

2. Maximum demand: 40,000 units of product A, and 20,000 units of product B.

3. The total hours available are 98,000.

Required:

1. (i) Using the Throughput Accounting method, determine the optimal production schedule. (30 marks)

2. (ii) Prepare the Throughput profit statement (30 marks)

3. (iii) Calculate the Throughput Accounting ratios and comment on the results. (10 marks)

4. (iv) The operations manager at Uni Ltd argues that by focusing exclusively on financial performance, accountants provide no real solutions for improving the firm. Critique this perception. (30 marks)