Reference no: EM132561586

A cellular phone manufacturer situated in Kalabo district of western province (katondo cellular phones limited) produces three types of cellphones: Basic, Super and Delux. For the current year the company has a total of 10,000 direct labour hours and 7,500 machine hours available for production.

Here below, are the sales and production parameters relating to the three types of cellphones:

                                        Basic                                        Super                              Delux

Direct material @ K24/kg         0.75 kgs                            0.625 kg                   1.25 kg

Direct labour @ k24 per hour          0.125 hour                   0,125 hour                0.25 hour

Variable overhead 150% of direct

Labour cost                                         -                                  -                            -

Machine hours required                          0.15 hours                  0.1 hours               0.125 hours

Sales demand for one year (units)                 30,000                     18,000                    15,000

Selling price per unit                                       K68                        K120                        K170

Budgeted fixed production overhead is estimated to be K182,280 per month and the company has also budgeted for selling and administration expenses of K378,988 per quarter.

Required

Question (a) Compute for Katondo limited the optimal production plan and the expected profit.

Question (b) Discuss any four purposes of a system of standard costing

Question (c) Discuss any three different levels of performance which may be included as part of system of standard costing and comment on how these may relate to the purposes set out in (b) above.