Cohort Ltd makes three products: Legion, Centurion and Praefect. All three products are made from the same material. The production budget for June 2004 is as follows.

Required 

(a) Calculate the budgeted profit for June 2004. Show your workings. 

After the budget for June 2004 was prepared, Cohort Ltd learned that there was a shortage of the material and that it would not be able to obtain more than 28 000 kg in June.

(b) Prepare a revised production budget which will ensure that Cohort Ltd obtains the maximum profit from the available material. 

(c) Prepare a calculation to explain the difference between the original budgeted profit you have calculated in (a) and the revised profit you have calculated in (b).

Transcribed Image Text:

Legion Centurion Praefect Budgeted production (units) SX10000 2000 4000 Materials per unit (kg) 2 4 5 Direct labour per unit (hours) 5 6 Selling price per unit $130 $150 con $80 1984 Material cost: $10 per kg Total fixed expenses for June 2004: $115 000 W Labour rate of pay: $12 per hour 57-5