Page 248 - BA2 Integrated Workbook - Student 2017

Fundamentals of Management Accounting

13.3 A company requires 600 kg of raw material Z for a contract it is evaluating. It has
400 kg of material Z in inventory that was purchased last month. Since then the
purchase price of material Z has risen by 8% to $27 per kg. Raw material Z is
used regularly by the company in normal production.

What is the total relevant cost of raw material Z to the contract?

A $15,336

B $15,400

C $16,200

D $17,496

13.4 A company produces 3 products, details of which are shown below:

Product Demand Labour hours Kg of material X
per unit per unit
AA 500 2.5 3.5
BB 1,200 4 1.5

CC 800 3 2

In the next period, availability of labour hours and material X are:

Labour hours: 9,000 hours

Material X: 5,000 kg

When determining the production plan that will maximise the company's
profit next period, the company's products should be ranked according to
their:

A profit per labour hour

B profit per kg of material X

C contribution per labour hour

D contribution per kg of material X

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