Bumiku Bhd manufactures four different types of organic fertilizers which use the same basic raw materials...

 

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Bumiku Bhd manufactures four different types of organic fertilizers which use the same basic raw materials M24. The management is anticipating shortages of M24 to meet next year's production as the existing supplier can only supply 32,000 kilograms costing RM256,000. The information of the products for next year are set out below: Product Sales revenue Selling price Direct material (RM) (RM/packet) (RM/packet) Production Overhead (variable + fixed) (RM/packet) 520,000 RM40 12.00 5.40 342,000 RM38 9.60 4.60 201,600 RM28 4.00 4.00 228,800 RM26 5.60 4.40 The following information was available: 1. The budgeted fixed production overhead is RM91,200 and is absorbed based on budgeted units while the variable overhead is absorbed based on direct labour hours. 2. The direct labour rate is paid at RM8.00 per hour and variable production overhead is paid at RM2.00 per hour. 3. Headquarter charged 10% sales commission and 5% variable administration cost on selling price for each product. The fixed selling and distribution expense is expected to be RM50,000 per year. Required: a. Determine the shortfall in M24 to meet next year's production (3 marks) b. i. Determine the most profitable mix of the products in view of the shortage of M24. (10 marks) ii. Calculate the net income of the company if recommendation in part b (i) is adopted. (2 marks) C. Briefly explain TWO (2) limitations of using the optimum plan in determining the product mix in limiting factors situation. (2 marks) (Total: 17 marks) ABCD Bumiku Bhd manufactures four different types of organic fertilizers which use the same basic raw materials M24. The management is anticipating shortages of M24 to meet next year's production as the existing supplier can only supply 32,000 kilograms costing RM256,000. The information of the products for next year are set out below: Product Sales revenue Selling price Direct material (RM) (RM/packet) (RM/packet) Production Overhead (variable + fixed) (RM/packet) 520,000 RM40 12.00 5.40 342,000 RM38 9.60 4.60 201,600 RM28 4.00 4.00 228,800 RM26 5.60 4.40 The following information was available: 1. The budgeted fixed production overhead is RM91,200 and is absorbed based on budgeted units while the variable overhead is absorbed based on direct labour hours. 2. The direct labour rate is paid at RM8.00 per hour and variable production overhead is paid at RM2.00 per hour. 3. Headquarter charged 10% sales commission and 5% variable administration cost on selling price for each product. The fixed selling and distribution expense is expected to be RM50,000 per year. Required: a. Determine the shortfall in M24 to meet next year's production (3 marks) b. i. Determine the most profitable mix of the products in view of the shortage of M24. (10 marks) ii. Calculate the net income of the company if recommendation in part b (i) is adopted. (2 marks) C. Briefly explain TWO (2) limitations of using the optimum plan in determining the product mix in limiting factors situation. (2 marks) (Total: 17 marks) ABCD

Answer rating: 100% (QA)

Answer Solution Requirements a The shortfall in M24 to meet next years production Product A B C D Total a Sales revenue RM 520000 342000 201600 228800 1292400 b Selling priceRMpacket 40 38 28 26 c Sal... View the full answer