Question
QUESTION FIVE Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period: A B
QUESTION FIVE
Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period:
| A | B | C | D |
| Demand (units) 4,000 | 1,000 | 1,800 | 1,500 |
| Income( K ) 40,000
Costs (K) | 20,000 | 27,000 | 38,400 |
| Material 12,000 | 8,000 | 12,000 | 12,000 |
| Labour 12,000 | 6,000 | 8,000 | 15,000 |
| Variable Overhead 2,000 | 1,000 | 1,700 | 2,400 |
| Fixed Overhead 6,000 | 4,000 | 5,000 | 6,000 |
Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available.
Required:
- Find the limiting factor if the company wishes to produce the budgeted units as above. (3 Marks)
- Calculate and determine the order of profitability. (6Marks)
- Calculate the production mix that will maximise profit for the period and the profit that will result if that mix is produced. (14 Marks)
- Calculate the increase in profit if an extra 150 units of the limiting factor are made available. (2 Marks)
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Accounting, Chapters 1-13
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
25th Edition
1285069625, 9781285069623
