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COST AND MANAGEMENT ACCOUNTING
QUESTION 1
Wen Ltd produces three types of products, Silky, Dryee and Oilie.
All products are made from the same material Sulfate and use the same grade of workers and factory resources to produce them. The following information is available on each of the products:
Silky Dryee Oilie
Sulfate (grams) 50 70 80
Bottle (container cost) $0.05 $0.10 $0.15
Direct labour (hrs) 0.25 0.25 0.50
The material Sulfam costs $0.10 per gram and direct labour is paid at $15 per hour. Variable factory overheads are absorbed at two thirds of the direct labour cost.
Fixed overhead for the year relating to production is estimated at $40,500.
For the year 2006, it is expected the following to be sold:
Silky 9,980, Dryee 7,500 and Oilie 5,000.
The selling price per bottle of each type of product is expected to be:
Silky $14.00, Dryee $15.80 and Oilee $22.65
It is expected that in the year 2006, supplies of Sulfate will be limited to a total of 1 million grams of sulfate, as there is a shortage of supply from the local suppliers due to ...