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Royal Industries Ltd manufactures three different plastic products from a single raw material and by a common process. Budgeted data for the coming years
Royal Industries Ltd manufactures three different plastic products from a single raw material and by a common process. Budgeted data for the coming years are presented below. The production costs identified with the individual products are only the separate processing costs incurred after the split-off point Particulars Products Joint cost A B Output (units) 45,000 30,000 15,000 Selling price per unit $6 $12 $18 Production units: Direct material 3,00,000 Direct labour 24,000 36,000 30,000 1,50,000 Variable manufacturing overheads 12,000 18,000 12,000 48,000 Fixed manufacturing overheads 18,000 30,000 24,000 96,000 The sales manager has suggested the following sales-mix of products A, 30,000. B. 40,000, and C. 20,000 involving additional joint processing costs of $ 1,00,000 Comment on the economic feasibility of the proposed mix
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