ABC Company (ABC) is Namibian based company that produces three products, A, B, and C through a
Question:
ABC Company ("ABC") is Namibian based company that produces three products, A, B, and C through a process costing system. All the three products pass through process 1 which only has an hourly capacity to produce 1 200 units of A, 1 500 units of B and 600 units of C. The process operates eight hours in a day.The following information relates to the three products: Product A ;Selling price per is unit $150 &Material cost per unit is $70, Product B;Selling price per unit $120 &Material cost per unit is $40 while Product C;Selling price per unit is $300 &Material cost per unit is $100.The three products combined incur a conversion cost of $720 000 per day.
1.1)Determine the total amount of profit available to ABC if they are able to produce 6 000 units of A, 4 500 units B and 1 200 units of C per day?
1.2)Calculate the throughput ratio for each product?
1.3)Assuming the three products have unlimited demand, advise ABC on how to optimise their production?
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra