Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

To determine the new product mix and total contribution, we need to consider the existing limiting factors and the demand for each product. Given: Contribution

To determine the new product mix and total contribution, we need to consider the existing limiting factors and the demand for each product.
Given:
Contribution per unit for Product A: R1.50
Contribution per unit for Product B: R1.00
Demand for Product A: 200 units
Demand for Product B: 150 units
To find the new product mix, we need to allocate the available resources based on the contribution per unit. Since the contribution per unit for Product A is higher, we should prioritize producing more units of Product A.
Let's assume the available resources are sufficient to meet the demand for both products. In that case, we can allocate the resources as follows:
Calculate the total contribution for each product:
Total contribution for Product A: R1.50*200 units = R300
Total contribution for Product B: R1.00*150 units = R150
Calculate the contribution ratio for each product:
Contribution ratio for Product A: R300/(R300+ R150)=0.67
Contribution ratio for Product B: R150/(R300+ R150)=0.33
Determine the new product mix:
New units of Product A: 0.67*(200+150)=201 units
New units of Product B: 0.33*(200+150)=99 units
Therefore, the new product mix is 201 units of Product A and 99 units of Product B.
The total contribution for the new product mix is R300(R1.50*201 units) for Product A and R99(R1.00*99 units) for Product B, resulting in a total contribution of R399.
Please note that if the available resources are not sufficient to meet the demand for both products, the product mix and total contribution may vary.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting And Financial Management For Construction Project Managers

Authors: Len Holm

1st Edition

1138550655, 978-1138550650

More Books

Students also viewed these Accounting questions