question archive The following particulars are extracted from the records of a company
The following particulars are extracted from the records of a company
Subject:BusinessPrice: Bought3
The following particulars are extracted from the records of a company. Per Unit Product A Product B ? 100 2 Kg. ?10 ? 15 ?5 Sales Consumption of material Material cost Direct wages cost Direct expenses Machine hours used Overhead expenses: Fixed Variable ?100 3 Kg. 15 ? 10 ?6 2 wer ?5 ?15 ?10 ?20 Management Accounting 7.68 Direct wages per hour is * 5. Comment on profitability of each product (both use the same raw material) when: (i) Total sales potential in units is limited; (ii) Total sales potential in value is limited; (iii) Raw material is in short supply; (iv) Production capacity (in terms of machine hours) is the limiting factor. Ans. If the limiting factor is: Sales : Profitability is higher with B product: Raw material : Profitability is higher with A product; Production capacity : Profitability is higher with B product.
