Calculate the number of units of each product

Assignment Help Managerial Accounting

Reference no: EM132784533

QUESTION ONE - Maputo Ltd. Manufactures a wide range of home fittings. Recently, the company added to its range a picture frame. The standard cost specification for each side board is given below:

In Material and Quantity

Timber (Sh.280 per kg)

60% of 8 kg(Quantity)

40% of 3 kg(Quantity)

Varnish (Sh.300 per litre., 0.5 litre (Quantity)

Labour (Sh.60 per hour) 8 hours (Quantity)

During the month of September 2020, 620 side boards were manufactured. The actual quantities and costs incurred were as follows:

In Quantity and Shillings

Materials: Timber (kg) 4,500

(Quantity) 1,125,000 (Sh.)

Varnish 290 (Quantity)

70% of 400,000 (Sh.)

30% of 280,000 (Sh.)

Labour hours 5,200

(Quantity) 364,000 (Sh.)

The abnormal idle hours were recorded as 4,800 hours.

Required -

1. Materials price variance (for both materials).

2. Material usage variance (for both materials).

3. Labour rate of pay variance.

4. Labour efficiency variance.

5. Idle time variance.

6. Suggest possible causes of the material variances.

You have been appointed as a management accountant of Maputo ltd manufacturers with the first assignment to investigate the variances computed in (a) above. In the report you will issue to the management of the company, explain the matters you will address in your report concerning the variances in the course of your investigation.

QUESTION TWO - A company manufactures and sells three products X, Y & Z. The unit cost and revenue structure for each product and its maximum forecast demand for the coming period are as follows: -

Product A B C

Selling price per unit (Shs.)

280 -A

200 -B

240 -C

Variable cost per unit (Shs.)

140 -A

120 -B

160 -C

Maximum demand (units)

1000 -A

600 -B

600 -C

Machine hours required per unit

20 -A

8 -B

10 -C

The company has a maximum of 12,000 machine hours available during the coming period.

Required -

1. Calculate the number of units of each product X, Y, and Z which should be produced and sold in order to maximize profit.

2. Calculate the maximum profit earned from the decision strategy per 1 above.

3. Suggest other factors which management may wish to consider which could result in a change in their decision.

4. Calculate the product units to be produced and sold and the net profit earned if the company wish to maximize sales of product A because it is thought to be a future market leader.

Calculate the product units to be sold and the net profit earned it the company agree to produce a minimum of 80 % of the maximum demand of each product in order to maintain market spread.

Reference no: EM132784533

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