The following particulars are extracted from the records of a company.Product AProduct BSales (per unit)RO. 100RO. 120Consumption of materialMaterial cost2 kg3 kgRO. 10RO. 15Direct wages costRO. 15RO. 10Direct expensesRO. 5RO. 6Machine hours used3Overhead expenses:Fixed10Variable1520Direct wage per hour is RO.5.Comment on the profitability of each product (both use the same raw material) when:(i)Total sales potential in units is limitedProduction capacity (in terms of machine hours) is the limiting factor.Material is in short supply(ii)(iv)Sales potential in value is limited.

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Answered: RO. 1 erial 2 kg RO. 1 RO. 1 RO. E 3

Business

Accounting

RO. 1 erial 2 kg RO. 1 RO. 1 RO. E 3

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter19: Variable Costing (varcost)

Section: Chapter Questions

Problem 4R: To determine the effect of different levels of production on the company’s income, move to cell B7...

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