QUESTION $4(17$ marks$)$

Question a $(11$ marks$)$

The following estimated information is available for May $2020$:

The factory produces and sells two products $x$ and $Y$ through the same production process. Total

fixed production overhead cost is $$1,450,000$ and is absorbed by products $x$ and $Y$ at average

rate per hour based on budgeted production. The assembly process has maximum capacity of

$2,500$ hours limiting the overall estimated production and sales of products $x$ and $Y.$ The assembly

process' hours required are $0\mathrm{.}02$ per unit for product $x$ and $0\mathrm{.}03$ per unit for $Y.$

Required

i$.$ Calculate the mix in units of products $x$ and $Y$ maximizing the net profit and the value in $ of the

maximum net profit $(6$ marks$).$

A Ltd decided to determine the profit maximizing mix of products $x$ and $Y$ based on the throughput

accounting principle of maximizing the throughput return per production hour of the assembly

process. The variable overhead cost based on the value of the original budgeted production and

sales mix is now fixed.

Required

ii$.$ Calculate the mix in units of products $x$ and $Y$ maximizing net profit and calculate the value of

maximum net profit $(3$ marks$)$

iii. Calculate the throughput accounting ratio for products $x$ and $Y(2$ marks$)$

Question b

Explain the concepts of throughput accounting $(2$ marks$)$

Question c

describe the types of environmental costs $(2$ marks$)$

Question d

Describe the decisions a managing director has to make in the short run $(2$ marks$)$