Metallica Co is an engineering company that manufactures a number of products, using a team of...
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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 Metalica 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 Product P4 P6 S/unit S/unit Selling price Direct materials: 125 175 M1" 15 10 10 20 M2 Direct labour Variable overhead 20 10 30 15 30 Fixed overhead Total cost 20 75 105 * 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) 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 Metalica 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 Product P4 P6 S/unit S/unit Selling price Direct materials: 125 175 M1" 15 10 10 20 M2 Direct labour Variable overhead 20 10 30 15 30 Fixed overhead Total cost 20 75 105 * 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)
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a Product P4 Product P6 175 Selling Price S Less 125 Direct Material M1 S 15 10 M2 S 10 20 D... View the full answer
Related Book For
Managerial accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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