A processing company, Timao Co. Ltd., is extremely busy. It has increased its output andsales from 12,900 kg in 1st quarter of the year to 17,300 kg in the 2nd quarter. Althoughdemand is still rising, it cannot increase its output more than an additional 5% from itsexisting labour force, which is now at its maximum.Data for its four products in 2nd quarter were:The Kagocho Company has offered to supply 2000 kg of product Q at a delivered price of90% of Timao‟s Co. Ltd. Selling price. Timao Co. Ltd., will then be able toproduce extra of product P instead of product Q to the plant‟s total capacity.Required:a) State with supporting calculations, whether Timao Co. Ltd should accept the KagochoCompany‟s offer. b) Which would be the most profitable combination of subcontracting 2000kg of oneproduct at a price of 90% of its selling price and producing extra quantities of anotherproduct up to the plant total capacity?Assume that the market can absorb the extra output.
Next: Briefly describe characteristics of conflict which may be observed in the workplace.Previous: “Control theory offers valuable insights into the design and operation of management accounting information systems, but only under circumstances where an organization?s environment is stable and predictable... View More CPA Advanced Management Accounting Questions and Answers | Return to Questions Index
Get premium membership