Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period:A B C DDemand (units) 4,000 1,000 1,800 1,500Income K 40,000 20,000 27,000 38,400Costs KMaterial 12,000 8,000 12,000 12,000Labour 12,000 6,000 8,000 15,000Variable Overhead 2,000 1,000 1,700 2,400Fixed Overhead 6,000 4,000 5,000 6,000Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available.Required:(a) Find the limiting factor if the company wishes to produce the budgeted units as above. (b) Calculate and determine the order of profitability. (c) Calculate the production mix that will maximize profit for the period and the profit that will result if that mix is produced. (d) Calculate the increase in profit if an extra 150 units of the limiting factor are made available. QUESTION FIVEFee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures forthe forthcoming period:ADDemand (units)4,0001,0001,8001,500Income K40,00020,00027,00038,400Costs KMaterial12,0008,00012,00012,000Labour12,0006,0008,00015,000Variable Overhead2,0001,0001,7002,400Fixed Overhead6,0004,0005,0006,000Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought atK20 per kg and 2400 kgs of material is available.Required:(a) Find the limiting factor if the company wishes to produce the budgeted units asabove.(b) Calculate and determine the order of profitability.(c) Calculate the production mix that will maximize profit for the period and the profit that will resultif that mix is produced.(d) Calculate the increase in profit if an extra 150 units of the limiting factor are madeavailable.

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Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period: A B C D Demand (units) 4,000 1,000 1,800 1,500 Income K 40,000 20,000 27,000 38,400 Costs K Material 12,000 8,000 12,000 12,000 Labour 12,000 6,000 8,000 15,000 Variable Overhead 2,000 1,000 1,700 2,400 Fixed Overhead 6,000 4,000 5,000 6,000 Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available. Required: (a) Find the limiting factor if the company wishes to produce the budgeted units as above. (b) Calculate and determine the order of profitability. (c) Calculate the production mix that will maximize profit for the period and the profit that will result if that mix is produced.

Fee Ltd makes four products, A, B, C and D, and has produced the following budgeted figures for the forthcoming period: A B C D Demand (units) 4,000 1,000 1,800 1,500 Income K 40,000 20,000 27,000 38,400 Costs K Material 12,000 8,000 12,000 12,000 Labour 12,000 6,000 8,000 15,000 Variable Overhead 2,000 1,000 1,700 2,400 Fixed Overhead 6,000 4,000 5,000 6,000 Labour is paid at K10 per hour and is limited to 3,800 hours for the period. Materials are bought at K20 per kg and 2400 kgs of material is available. Required: (a) Find the limiting factor if the company wishes to produce the budgeted units as above. (b) Calculate and determine the order of profitability. (c) Calculate the production mix that will maximize profit for the period and the profit that will result if that mix is produced.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 7CE: Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced...

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