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t Ac counting 627B2 Financial Accounting & Managemen uestion 2 Peal Limited is a manufacturing company which produces three products A, B and C company
t Ac counting 627B2 Financial Accounting & Managemen uestion 2 Peal Limited is a manufacturing company which produces three products A, B and C company is now preparing the budget for the 2017. The sales and costs information of the three products per unit are listed below: . The 12,000 units 18,000 units 15,000 units Expected market demand (units) Selling Price per unit-High Demand Selling Price per unit -Low Demand $180 $160 $220 $180 $220 $200 Costs per unit: $80 $40 $20 $18 $70 $50 $10 S60 S30 Direct labour ($40 per hour) Direct materials ($25 per kg) Variable overhead Variable selling overhead $12 Fixed overhead $250,000 180,000 $230,000 Buying price from outsiders S160 The company will adjust its selling price on the basis of the reaction of the market. It is expected that the market demand is low in 2017. However, the company estimated that direct material is limited to 60,000 kg and direct labour is restricted to 85,000 hours for the year 2017. For those products it cannot produce, the company will buy it from outsiders. Required: (a) Determine the limiting factor for Peal Limited. e ih Imaten Omaks) k, ade Calculate the sales mix and the production plan which will maximize the firm's profit. (12 marks) (b) Show all workings, l.culute (orvitin/un-(for Ak (e) On the basis of the sales mikyou tdehied in art (b) and outsource the production of remaining unproduced products to third party, calculate the overall profit for Peal (10 marks) tetul (abouhr neded Limited. Page 9 of 1
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