Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a company manufactures two products a and b. the b

A company manufactures two products A and B. The budget statement below was produced using...

70.2K

Verified Solution

Question

Accounting

A company manufactures two products A and B. The budget statement below was produced using a traditional absorption costing approach. It shows the profit per unit for each product based on the estimated sales demand for the period.

Product A ($) Product B ($)

Selling price per unit 46 62

Production costs per unit:

Material costs 18 16

Labour costs 4 10

Overhead costs 8 12

Profit per unit 16 24

Additional information:

Estimated sales demand (units) 6000 8000

Machine hours per unit 0.5 0.8

It has now become apparent that the machine which is used to produce both products has a maximum capacity of 8000 hours and the estimated sales demand cannot be met in full. Total production costs for the period, excluding direct material cost, are $248 000. No inventories are held of either product.

Required:

(i) Calculate the return per machine hour for each product if a throughput accounting approach is used.

(ii) Calculate the profit for the period, using a throughput accounting approach, assuming the company prioritizes Product B.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students