Answered: If output of one of the products needs…

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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Question

Below are details of the four products made by Krane Ltd.

	A	B	C	D
Selling price per unit	60	80	100	120
Variable cost per unit	24	36	48	50
Machine time per unit	3	4	6.5	8

Weekly demand for all products is the same. Unfortunately, time available on the machine used to produce all four products is likely to be reduced in the coming week due to maintenance work required. If output of one of the products needs to be restricted and management want to lose as little profit as possible, which of the product line’s outputs should they restrict?

Product A
Product B
Product C
Product D

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