Kingfisher Ltd can make three products (X, Y and Z) using the same machines. Various estimates...
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Kingfisher Ltd can make three products (X, Y and Z) using the same machines. Various estimates for next year have been made as follows: Product Z $40 3,000 units Variable costs per unit $14 $21 $32 Time per unit required on machine hours 3 hours 2 hours 1 hour Selling price per unit Normal production X $20 3,000 units Fixed overhead costs for next year are expected to total $60,000. Required: Y $30 2,000 units a) What is the break-even point in total units, and for each product, if the present sales mix is maintained? Assume sales are proportional to production. (5 marks) b) If the business has maximum machine capacity for next year of 12,000 hours, in which order of preference would the three products come? (3 marks) Kingfisher Ltd can make three products (X, Y and Z) using the same machines. Various estimates for next year have been made as follows: Product Z $40 3,000 units Variable costs per unit $14 $21 $32 Time per unit required on machine hours 3 hours 2 hours 1 hour Selling price per unit Normal production X $20 3,000 units Fixed overhead costs for next year are expected to total $60,000. Required: Y $30 2,000 units a) What is the break-even point in total units, and for each product, if the present sales mix is maintained? Assume sales are proportional to production. (5 marks) b) If the business has maximum machine capacity for next year of 12,000 hours, in which order of preference would the three products come? (3 marks)
Expert Answer:
Answer rating: 100% (QA)
a To calculate the breakeven point in total units and for each product we need to first calculate the contribution margin per unit for each product Th... View the full answer
Related Book For
Management And Cost Accounting
ISBN: 9781292232669
7th Edition
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan
Posted Date:
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