Reference no: EM132664915
ABC Company ("ABC") is Namibian based company that produces three products, A, B, and C through a process costing system. All the three products pass through process 1 which only has an hourly capacity to produce 1 200 units of A, 1 500 units of B and 600 units of C. The process operates eight hours in a day.The following information relates to the three products:
Product A Selling price per is unit $150 & Material cost per unit is $70,
Product B Selling price per unit $120 & Material cost per unit is $40 while
Product C Selling price per unit is $300 &Material cost per unit is $100
- The three products combined incur a conversion cost of $720 000 per day.
Problem 1: Determine the total amount of profit available to ABC if they are able to produce 6 000 units of A, 4 500 units B and 1 200 units of C per day?
Problem 2: Calculate the throughput ratio for each product?
Problem 3: Assuming the three products have unlimited demand, advise ABC on how to optimise their production?
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