Hi
Please see below a short solution to your query -:
A B C
Cost of manufacturing 15 34 45
Purchase from Market 21 42 39
Net Saving 6 8 6
Hours required to Produce 2 4 6
Per Hour Saving 3 2 1
Ranking I II III
Productions in Units 5000 4500 To be purchase from outside
Hours consumed 10000 18000
Total Hour available 28000 Hours Limiting Factor
So Ans is 5000 units of A and 45 units of B
Please ask if you need further clarifications
Regards
Sudhir
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SUDHIR LEVI
Chief Financial Officer
New Delhi
India
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Original Message:
Sent: 12-02-2022 01:29 PM
From: PRAGATI VERMA
Subject: Part 2, Time constraint query.
Hello Folks! Please help me with this concept.
Synergy Inc. produces a component that is popular in many refrigeration systems. Data on three of the five different models of this component are as follows.
| | Model |
| | A | B | C |
| Volume needed (units) | 5,000 | 6,000 | 3,000 |
| Manufacturing costs | | | |
| Variable direct costs | $10 | $24 | $20 |
| Variable overhead | 5 | 10 | 15 |
| Fixed overhead | 11 | 20 | 17 |
| Total manufacturing costs | $26 | $54 | $52 |
| Cost if purchased | $21 | $42 | $39 |
Synergy applies variable overhead on the basis of machine hours at the rate of $2.50 per hour. Models A and B are manufactured in the Freezer Department, which has a capacity of 28,000 machine processing hours. Which one of the following options should be recommended to Synergy's management?
A.
Purchase all three products in the quantities required
B.
Manufacture all three products in the quantities required.
C.
The Freezer Department's manufacturing plan should include 5,000 units of Model A and 4,500 units of Model B
D.
The Freezer Department's manufacturing plan should include 2,000 units of Model A and 6,000 units of Model B