ABC corporation makes products Alpha and Beta. Both products make use of the same equipment. The following
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ABC corporation makes products Alpha and Beta. Both products make use of the same equipment. The following were provided to you with regard to these products in preparation for its budget for next year.
Weight per unit given | Alpha | Alpha | Beta | Beta |
At 10,000 units | At 12,500 units | At 5,000 units | At 8,000 units | |
Selling price | 100 | 100 | 250 | 250 |
Less: Costs | 70 | 62 | 230 | 170 |
Profit | 30 | 38 | 20 | 80 |
Other information are as follows:
Alpha | Beta | |
Expected market demand next year | 10,000 units | 6,000 units |
Required Machine hours per unit | 2 | 3 |
Total available machine hours | 20,000 |
1. What is the contribution margin of Alpha if ABC was able to optimize the use of the machine hours?
2. How many units of Beta should be produced to maximize profits?
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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