Requirement in units 2,000 3,500 1,500 2,800 Direct expenses relating to the processing of metal amount in Rs.5.00 per machine hours. Fixed overhead are absorbed as percentage of direct wages. Required: Which components & in what quantities, should be manufactured in the 20,000 hours of press time available
Fine electrical company manufactures capacitors, which consist of four components namely A, B, C & D. The company is in the process of preparing its budget for year 2001. The production manager’s review shows that it will not be possible to manufacture all requirements for components A, B, C & D because of mental pressing limitation of 20,000 hours. It is further informed that:
Standard cost per unit
Component A B C D
Variable cost Rs. Rs. Rs. Rs.
Direct material 18.50 13.50 12.50 22.00
Direct wages 5.00 4.00 11.00 20.00
Direct expenses 5.00 10.00 5.00 30.00
Fixed
Total production cost 31.00 29.50 34.00 82.00
- Requirement in units 2,000 3,500 1,500 2,800
- Direct expenses relating to the processing of metal amount in Rs.5.00 per machine hours.
- Fixed overhead are absorbed as percentage of direct wages.
Required:
Which components & in what quantities, should be manufactured in the 20,000 hours of press time available.
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