A business makes three products, A, B and C. All three products require the use of two types ofmachine: cutting machines and assembling machines. Estimates for next year include thefollowing:ProductSelling price (£ per unit)Sales demand (units)Material cost (£ per unit)Variable production cost (£ per unit)Time required per unit on cutting machines (hours)Time required per unit on assembling machines (hours)A252,5001271.00.5B303,4001341.01.0C185,1001030.50.5EXERCISESFixed cost for next year is expected to total £42,000.The business has cutting machine capacity of 5,000 hours a year and assembling machinecapacity of 8,000 hours a year.Required:(a) State, with supporting workings, which products in which quantities the business should planto make next year on the basis of the above information. (Hint: First determine whichmachines will be a limiting factor (scarce resource).)(b) State the maximum price per product that it would be worth the business paying to a sub-contractor to carry out that part of the work that could not be done internally.

The contribution margin is the difference between sales and variable cost, it is the amount…

A business makes three products, A, B and C. All three products require the use of two types of machine: cutting machines and assembling machines. Estimates for next year include the following: Product Selling price (£ per unit) Sales demand (units) Material cost (£ per unit) Variable production cost (£ per unit) Time required per unit on cutting machines (hours) Time required per unit on assembling machines (hours) A 25 2,500 12 7 1.0 0.5 B 30 3,400 13 4 1.0 1.0 C 18 5,100 10 3 0.5 0.5

A business makes three products, A, B and C. All three products require the use of two types of machine: cutting machines and assembling machines. Estimates for next year include the following: Product Selling price (£ per unit) Sales demand (units) Material cost (£ per unit) Variable production cost (£ per unit) Time required per unit on cutting machines (hours) Time required per unit on assembling machines (hours) A 25 2,500 12 7 1.0 0.5 B 30 3,400 13 4 1.0 1.0 C 18 5,100 10 3 0.5 0.5

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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