A company makes three types of products A, B & C. The average labor rate is Rs. 30/hr. and the total expenditure of the company is Rs. 10,220,000. Following information is provided for costing. Product Quantity Material cost Labor per unit (Rs) 1000 Hrs./unit 15 A 800 1000 1200 12 1500 800 10 a. Compute the cost/unit of each product, also what is the sale price per unit for 10% profit. b. If 30% of total overhead is its variable component. Compute the marginal cost per unit of each product. If product B & C are sold at a loss of 10% of cost per unit, Compute contribution of each to fixed component of total overhead cost. c. Would you stop production of any of the three products? If yes, why?

A company makes three types of products A, B & C. The average labor rate is Rs. 30/hr. and the total expenditure of the company is Rs. 10,220,000. Following information is provided for costing. Product Quantity Material cost Labor per unit (Rs) 1000 Hrs./unit 15 A 800 1000 1200 12 1500 800 10 a. Compute the cost/unit of each product, also what is the sale price per unit for 10% profit. b. If 30% of total overhead is its variable component. Compute the marginal cost per unit of each product. If product B & C are sold at a loss of 10% of cost per unit, Compute contribution of each to fixed component of total overhead cost. c. Would you stop production of any of the three products? If yes, why?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 7EB: Rocks Industries has two products. They manufactured 12,539 units of product A and 8.254 units of...

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