Sunny Ltd produces four products. Information on each product is shown below: Budgeted sales (units) Selling...
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Sunny Ltd produces four products. Information on each product is shown below: Budgeted sales (units) Selling prices. Variable costs per unit Direct materials Direct labour Variable overhead A 4.000 $60 $27 $12 $3 B 2,000 $45 $10 $16 $4 C 3,000 $52 $18 $16 $4 D 1,000 $95 $40 $24 $6 The company is experiencing shortage of skilled labour time needed for production of all the four products. Presently, only 16,600 hours of skilled labour time are available each week and the cost per direct labour hour is $8. Required: (a) Perform relevant analysis of the limiting factor (16,600 labour hours), determine how many units of each product are to be produced and sold to maximise the total contribution margin. (b) Managers often use the relevant costs concept for making business decisions. Distinguish between relevant and irrelevant costs and provide two examples for each type of costs. Sunny Ltd produces four products. Information on each product is shown below: Budgeted sales (units) Selling prices. Variable costs per unit Direct materials Direct labour Variable overhead A 4.000 $60 $27 $12 $3 B 2,000 $45 $10 $16 $4 C 3,000 $52 $18 $16 $4 D 1,000 $95 $40 $24 $6 The company is experiencing shortage of skilled labour time needed for production of all the four products. Presently, only 16,600 hours of skilled labour time are available each week and the cost per direct labour hour is $8. Required: (a) Perform relevant analysis of the limiting factor (16,600 labour hours), determine how many units of each product are to be produced and sold to maximise the total contribution margin. (b) Managers often use the relevant costs concept for making business decisions. Distinguish between relevant and irrelevant costs and provide two examples for each type of costs.
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Sunny Ltd Product cost Analysis A B C D Budgeted Sales Units 4000 2000 3000 1000 Selling Price 60 ... View the full answer
Related Book For
Accounting For Cambridge International AS And A Level
ISBN: 9780198399711
1st Edition
Authors: Jacqueline Halls Bryan, Peter Hailstone
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