Topic-STRATEGIC MANAGEMENT ACCOUNTING Question 1 Metallica Co is an engineering company that manufactures a number of products, using a team of highly skilled workers and a variety of different metals. A supplier has informed Metallica Co that the amount of M1, one of the materials used in production, will be limited for the next three-month period. The only items manufactured using M1 and their production costs and selling prices (where applicable) are shown below: Product P4 $/unit 125 Product P6 $/unit 175 Selling price Direct materials: M1* M2 Direct labour Variable overhead Fixed overhead Total cost 15 10 20 10 20 75 10 20 30 15 30 105 * Material M1 is expected to be limited in supply during the next three months. These costs are based on M1 continuing to be available at a price of $20 per square metre. The price of M2 is $10 per square metre. Required: (a) Calculate the contribution per unit for each product and determine the optimum production for the company using marginal costing approach. (6 marks) (b) Metallica Co carried out some market research which suggested that a change should be made to the selling price of both Product P4 and P6. As a result, the new contribution per unit for P4 is $85 and for P6 it is $95. Determine the revised optimum production plan for Metallica Co based on the change in selling price. (6 marks) (c) If Metallica Co operated in a throughput accounting environment, calculate the profit-maximising output and the resulted profits. (8 marks) (Total: 20 marks)