Solution-Calculate the maximum contribution and profit

Calculate the maximum contribution and profit

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Reference no: EM133065958

Question - A manufacturing company has the following revenue and cost structure:

	PRODUCT
	A B C D
Maximum output and sales	7,500	6,000	8,200	8,500
	$	$	$	$
Selling price per unit	25	31	45	52
Variable production costs:
Direct material	7	12	20	18
Direct labour	6	8	13	16
Overhead	4	3	5	6
Direct material per unit	4 litres	2.5 litres	2 litres	3 litres

The supply of direct material is limited to 70,000 litres. Budgeted fixed costs amount to 100,000.

Required -

1. Determine the optimal product mix.

2. Calculate the maximum contribution and profit.

3. State any five non-financial reasons that can be considered by management in a 'make or buy' decision.

4. Give any three uses of marginal costing in management decision making.

Reference no: EM133065958

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Calculate the maximum contribution and profit

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