The following particulars are extracted from the records of a company. Particulars Product A Product B Sale price per unit OMR 100 OMR 240 Consumption of material 4 kg 6 kg Material cost OMR20 OMR 30 Direct labour cost 30 20 Direct expenses 10 12 Machine hours used 6 4 Fixed overheads per unit OMR 10 OMR 20 Variable overheads per unit 30 40 Direct labour per hour is OMR 10. Comment on the profitability of each product [both use same raw material] when, I] total sales potential in units is limited II] total sales potential in value is limited III] raw material is in short supply IV} production capacity [in terms of machine hours] is limited. Assuming rawmaterial asthe key factor, availability of which is 20,000 kg and maximumsales potential of each product being 7000 units, find out the product mix which will yield maximum profits.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The following particulars are extracted from the records of a company.
| Particulars | Product A | Product B |
| Sale price per unit | OMR 100 | OMR 240 |
| Consumption of material | 4 kg | 6 kg |
| Material cost | OMR20 | OMR 30 |
| Direct labour cost | 30 | 20 |
| Direct expenses | 10 | 12 |
| Machine hours used | 6 | 4 |
| Fixed overheads per unit | OMR 10 | OMR 20 |
| Variable overheads per unit | 30 | 40 |
Direct labour per hour is OMR 10. Comment on the profitability of each
product [both use same raw material] when, I] total sales potential in units
is limited II] total sales potential in value is limited III] raw material is in
short supply IV} production capacity [in terms of machine hours] is limited.
Assuming rawmaterial asthe key factor, availability of which is 20,000 kg and
maximumsales potential of each product being 7000 units, find out the product
mix which will yield maximum profits.
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