The cost per unit of the three products, A, B and C of a concern is as follows : A B C $ $ Direct Materials 10 8. Direct Labour 7 6. Variable Expenses Fixed Expenses 4 3 2 Total Cost Profit 23 23 20 7 Selling Price Number of units produced 32 30 26 10,000 5,000 8,000 Production arrangements are such that if one product is given up, the production of the others can be raised by 50%. The directors propose that C should be given up because the contribution in that case is the lowest. Do you agree ?

The cost per unit of the three products, A, B and C of a concern is as follows : A B C $ $ Direct Materials 10 8. Direct Labour 7 6. Variable Expenses Fixed Expenses 4 3 2 Total Cost Profit 23 23 20 7 Selling Price Number of units produced 32 30 26 10,000 5,000 8,000 Production arrangements are such that if one product is given up, the production of the others can be raised by 50%. The directors propose that C should be given up because the contribution in that case is the lowest. Do you agree ?

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

The cost per unit of the three products, A, B and C of a concern is
as follows :
A
B
C
$
Direct Materials
10
8.
9.
Direct Labour
7
Variable Expenses
Fixed Expenses
4
3
Total Cost
Profit
23
23
20
7
Selling Price
Number of units produced
32
30
26
10,000
5,000
8,000
Production arrangements are such that if one product is given up, the production of the others
can be raised by 50%. The directors propose that C should be given up because the contribution in
that case is the lowest. Do you agree ?

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