Question Tag: Profit Maximization

Search 500 + past questions and counting.

MA – Nov 2024 – L2 – Q5b – Profit Maximization and Batch Selection

Determination of the optimal number of printer batches to import and sell to maximize profit.

Question

Awuah deals in online business, importing and selling printers. The cost of each set of printers varies depending on the number purchased, although printers can only be purchased in batches of 1,000 units. Awuah also has to pay import taxes which vary according to the quantity purchased. Awuah has already carried out some market research and identified that sales quantities are expected to vary depending on the price charged.

The following data has been established for the first month:

Number of Batches Imported and Sold	Average Cost per Unit (Including Import Taxes) (GH¢)	Total Fixed Costs per Month (GH¢)	Expected Selling Price per Unit (GH¢)
1	10.00	10,000	20
2	8.80	10,000	18
3	7.80	12,000	16
4	6.40	12,000	13

Required:

Determine the number of batches of printers Awuah should import and sell to maximize profit.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Batch Selection, CVP Analysis, Fixed and Variable Costs, Profit Maximization
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: Nov 2024

MA – Nov 2024 – L2 – Q5a – Limiting Factor Decision and Profit Maximization

Determination of the optimum production plan considering scarce resources.

Question

Manche produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below:

Product	C	L
Unit Selling Price (GH¢)	130	160
Resources per Unit:
Direct Labour (GH¢8 per hour)	3 hours	5 hours
Material A (GH¢3 per kg)	5 kg	4 kg
Material B (GH¢7 per litre)	2 litres	1 litre
Machine Hours (GH¢10 per hour)	3 hours	4 hours
Fixed Overhead (GH¢8 per hour)	1 hour	1 hour

Market research shows that the maximum demand for products C and L during August 2024 is 500 units and 800 units respectively. This does not include an order that Manche has agreed with a commercial customer for the supply of 250 units of C and 350 units of L at selling prices of GH¢100 and GH¢135 per unit, respectively. Failure by Manche to deliver the order in full by the end of August will cause Manche to incur a GH¢5,000 financial penalty.

At a recent meeting between the Purchasing Manager and Production Manager to discuss the production plans of C and L for August, the following resource restrictions for the year were identified:

Direct Labour Hours: 90,000 hours
Machine Hours: 90,000 hours

The resource restrictions were evenly distributed throughout the year.

Required:

i) Prepare the optimum production plan for August 2024 using relevant computations.
ii) Determine the contribution from adopting this plan.
iii) Using relevant computations, show whether Manche should complete the order from the commercial customer assuming any excess labour hours for not making the contract can be used to produce 300 units of product ‘F’ with a contribution of GH¢55 per unit.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution analysis, Decision Making, Limiting Factor, Optimum production, Profit Maximization
Level: Level 2

Topic: Decision making techniques
Series: Nov 2024

BMF – Nov 2020 – L1 – SA – Q12 – Basics of Business Finance and Financial Markets

Identify the term for strategies maximizing profits through innovative financial methods.

Question

Strategies adopted by companies to maximize profits using innovative methods to compute the fair value of financial instruments is best described as:
A. Financial accounting
B. Financial engineering
C. Strategic financial management
D. Strategic management accounting
E. Strategic financial accounting

Answer

Find Related Questions by Tags, levels, etc.

Tags: Financial Engineering, Financial instruments, Profit Maximization
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2020

PM – May 2024 – L2 – SC – Q7 – Cost-Volume-Profit (CVP) Analysis

Analysis of production constraints to determine optimal production levels and profit maximization using contribution analysis.

Question

Jumbo Tailors Nigeria Limited manufactures three unique wears for which the maximum revenue for the coming year is estimated as follows:

Product	Estimated Revenue (₦)
Trousers	8,250,000
Jackets	9,880,000
Skirts	12,390,000

Summarized unit cost data are as follows:

Product	Direct Material (₦)	Direct Labour (₦)	Variable Costs (₦)	Fixed Costs (₦)
Trousers	1,000	500	800	250
Jackets	900	450	1,600	500
Skirts	700	350	1,000	400

The allocation of fixed costs was derived from last year’s production level and may be reviewed if current output plans differ.

Estimated Selling Prices:

Trousers: ₦3,300
Jackets: ₦3,800
Skirts: ₦2,950

The products are processed on sewing machines housed in three blocks. Block A contains type I machines, with an estimated maximum machine hour capacity of 39,200 hours and a fixed overhead cost of ₦1,960,000 per annum. Block B contains type II machines, with 20,000 machine hours available and a fixed overhead cost of ₦1,500,000 per annum. Block C also contains type II machines, with 16,000 machine hours available and a fixed overhead cost of ₦740,000 per annum.

The required machine hours per unit of output for each product on each machine type are as follows:

Product	Type I Machine (hours)	Type II Machine (hours)
Trousers	2	3
Jackets	4	6
Skirts	6	2

Required:
a. Determine the optimal production plan which Jumbo Tailors Nigeria Limited should adopt. (12 Marks)
b. Calculate the total profit that would be made if the production plan in (a) above is adopted. (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution analysis, Machine Utilization, Optimal production, Profit Maximization
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: MAY 2024

PM – May 2024 – L2 – SA – Q1 – Costing Systems and Techniques

Calculation of machine utilization rates, identification of bottlenecks, and application of throughput accounting.

Question

Tani Kamac (TK) makes three products A, B, and C. All three products must be offered for sale each month to provide a complete market service. The products are fragile, and their quality deteriorates rapidly once they are manufactured. The products are produced on two types of machines and worked on by a single grade of direct labor. Five direct employees are paid ₦80 per hour for a guaranteed minimum of 160 hours each per month. All products are first molded on machine type 1 and then finished and sealed on machine type 2. The machine hours required for each product are as follows:

	Product A (hrs/unit)	Product B (hrs/unit)	Product C (hrs/unit)
Machine 1	1.5	4.5	3.0
Machine 2	1.0	2.5	2.0

The capacity of machine type 1 is 600 hours per month, and machine type 2 is 500 hours per month.

Additional details:

	Product A	Product B	Product C
Selling Price (₦)	910	1,740	1,400
Component Cost (₦)	220	190	160
Other Direct Material Cost (₦)	230	110	140
Direct Labor Cost at ₦80/hr	60	480	360
Overheads (₦)	240	620	520
Profit (₦)	160	340	220
Maximum Monthly Demand (units)	120	70	60

TK uses marginal costing and contribution analysis for decision-making, while profits are reported using absorption costing.

Required:
a. Calculate the machine utilization rate per month for each machine and explain which of the machines is the bottleneck/limiting factor. (4 Marks)
b. Using the current system of marginal and contribution analysis, calculate the profit-maximizing monthly output of the three products. (4 Marks)
c. Explain why throughput accounting might provide more relevant information in TK’s circumstances. (6 Marks)
d. Using a throughput approach, calculate the throughput-maximizing monthly output of the three products. (5 Marks)
e. Explain the throughput accounting approach to optimizing inventory and its valuation. Contrast this approach to the current system used by TK. (5 Marks)
f. Explain the importance of identifying scarce resources when preparing budgets and the use of linear programming to determine the optimum use of resources. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution analysis, Machine Utilization, Marginal Costing, Profit Maximization, Throughput Accounting
Level: Level 2

Topic: Costing Systems and Techniques
Series: MAY 2024

PM – Nov 2020 – L2 – Q2 – Costing Systems and Techniques

Analyze the profit-maximizing output using marginal costing and throughput accounting for two products, and compare both methods.

Question

Ideal Nigeria Limited manufactures two products, Light and Medium, on the same machines. Sales demand for the products exceeds the machine capacity of the company’s production department. The potential sales demand in each period is for 10,000 units of Light and 15,000 units of Medium. Sales prices cannot be increased due to competition from other producers in the market. The maximum machine capacity in the production department is 40,000 hours in each period.

The following cost and profitability estimates have been prepared:

	Light	Medium
Sales price	N110	N135
Direct materials	N50	N45
Direct labour and variable overhead	N30	N55
Contribution per unit	N30	N35
Machine hours per unit	1.5 hours	2 hours

Fixed costs in each period are N450,000.

Required:
a. Using marginal costing principles, calculate the profit-maximizing output in each period, and the amount of profit. (4 Marks)
b. Explain how throughput accounting differs from marginal costing in its approach to maximizing profit. (4 Marks)
c. Using throughput accounting, calculate the throughput accounting ratio for Light and Medium. (8 Marks)
d. Using throughput accounting principles, calculate the profit-maximizing output in each period, and the amount of profit. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution, Marginal Costing, Profit Maximization, Throughput Accounting
Level: Level 2

Topic: Costing Systems and Techniques
Series: NOV 2020

PM – Nov 2021 – L2 – Q3 – Costing Systems and Techniques

Calculate profit-maximizing output using both marginal and throughput accounting principles and compare the approaches for Kahkiri Limited.

Question

The following cost and profitability estimates have been prepared:

Product	X	Y
Sales price	44	54
Direct materials	20	18
Direct Labour	6	11
Variable overhead	6	11
Contribution per unit	12	14
Attributable fixed cost	N10,000	N10,000
Machine hours per unit	1.5 hours	2 hours

Fixed costs in each period are N100,000.

Required:
a. Using marginal costing approach, calculate the profit-maximising output for the period, and the associated profit for each product and the company. (4 Marks)
b. What are the advantages of throughput accounting over marginal costing method in profit-maximising decisions? (4 Marks)
c. Calculate the throughput accounting ratio for Product X and for Product Y. (8 Marks)
d. Using throughput accounting principles, calculate the profit-maximising output in each period, and calculate the amount of the profit. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution per Unit, Fixed Costs, Machine Hours, Marginal Costing, Profit Maximization, Throughput Accounting
Level: Level 2

Topic: Costing Systems and Techniques
Series: NOV 2021

PM – Nov 2021 – L2 – Q1 – Budgeting and Budgetary Control

Explore material input constraints, determine optimal production, and evaluate outsourcing and penalties for non-fulfillment of orders.

Question

Kikelomo Limited manufactures three products K, T, and F, using different quantities of the same resources. Budget information per unit is provided:

	K	T	F
Market selling price	1,800	2,520	3,000
Direct labour (₦140/hour)	280	560	700
Material A (₦60/kg)	300	240	420
Material B (₦120/kg)	480	720	600
Variable overhead (₦80/hour)	160	320	400
Fixed overhead	240	140	240
Total cost	1,460	1,980	2,360
Profit	340	540	640
Total budgeted sales units	500	800	1,600

The budgeted sales are for the month of June but do not include an order from a major customer to supply 400 units per month of each of the three products at a discount of ₦200 per unit. During June, management anticipates a shortage of material B, with only 17,500 kgs available. Kikelomo Ltd cannot hold inventory of raw materials, work-in-progress, or finished products.

Required:
a. State THREE factors that may cause input materials to be a budget constraint and identify steps to overcome this constraint. (6 Marks)
b. Prepare calculations to show production that will maximise Kikelomo Ltd’s profit for June. (9 Marks)
c. Kikelomo Ltd has realised that the contract with the major customer does not have to be fully met, but a financial penalty may apply. Calculate the lowest value of the financial penalty to ensure the order is met in full. (6 Marks)
d. Assume the material B shortage will continue and management has decided to outsource some production. Advise management on the advantages and disadvantages of outsourcing. (9 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting, Contribution analysis, Financial Penalty, Material Constraints, Outsourcing, Production planning, Profit Maximization
Level: Level 2

Topic: Budgeting and Budgetary Control
Series: NOV 2021

QTB – Nov 2015 – L1 – SB – Q2c – Mathematics of Business Finance

Find the level of output at which profit is maximized using given revenue and cost functions.

Question

Given that the Total Revenue (TR) function is:

and the Total Cost (TC) function is:

Determine the level of output at which profit is maximized. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Calculus, Output Level, Profit Maximization, Total Cost, Total Revenue
Level: Level 1

Topic: Mathematics of Business Finance
Series: NOV 2015

BMF – May 2018 – L1 – SB – Q5a – Basics of Business Finance and Financial Markets

Discusses weaknesses of commonly-used corporate financial objectives.

Question

Corporate financial objectives may be expressed as maximizing shareholders’ wealth, as well as profit or growth in earnings. State and explain briefly the weaknesses of THREE commonly-used corporate financial objectives.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Financial Objectives, Profit Maximization, Shareholder Wealth
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAY 2018

PM – Nov 2018 – L2 – SA – Q1 – Decision-Making Techniques

Maximize profit for JJ Company by determining the optimal production plan and advising on Year 2 scenarios for fulfilling demand.

Question

JJ Company specializes in the manufacture and distribution of accessories for cars and motorcycles across central Lagos and the suburbs. The board and management of the company have decided to expand their potential market by capitalizing on the recent demand for pedal cycles caused by congestion and concerns for global warming. They intend to start manufacturing pedal cycles from 2019.

The design team has developed four models A, B, C, and D for the initial launch of the pedal cycle. The manufacturing process involves frame manufacturing and assembly/accessory fitting.

Year 1

At present, there are 40 employees available to undertake frame manufacturing and 20 available for assembly and accessory fitting. Each employee works a 37-hour week, and no overtime is permitted. Employees working on frame manufacturing cost N1,100 per hour, while those working on assembly/accessory fitting cost N1,500 per hour. All employees can be fully utilized elsewhere if not working on this venture.

The anticipated time in hours that each process will take is as follows:

Model	Frame Manufacturing (hours)	Assembly/Accessory Fitting (hours)
A	2.25	1.25
B	2.20	1.80
C	2.20	1.40
D	2.60	3.00

Direct materials are expected to cost N5,500 for Model A, N6,000 for Models B and C, and N10,000 for Model D. There is no limit on the availability of materials.

Variable overheads of N2,700 per pedal cycle are incurred for both Models A and C, and N3,000 per pedal cycle for both Models B and D.

Fixed overheads allocated to the pedal cycle workshop are N666,000 per annum. The organization uses labor hours to base its overhead absorption rates.

Initial market research indicates that demand and selling prices are likely to be as follows:

Model	Number of Pedal Cycles	Selling Price (N)
A	200	14,550
B	75	16,500
C	220	17,000
D	80	24,000

Year 2

In Year 2, two additional options are available:

Lifting the overtime ban and paying overtime at a rate of time and a half. This will necessitate raising the selling price of all units of the specific model being completed outside normal working hours by N2,500 per pedal cycle. The selling price of the other models remains the same as in Year 1.
Buying in the completed pedal cycle necessary to meet demand from another supplier. This would cost N27,000 per pedal cycle, and the selling price of all units of the model would be increased by N5,500. However, the board is concerned this option may reduce demand.

Required:

a. Determine the production plan that would maximize the profit available to JJ Company in Year 1, assuming no overtime is worked. State the profit that would be earned as a result of this plan. (14 Marks)
b. Advise JJ Company of its most profitable course of action in Year 2, assuming all demand is to be satisfied. (8 Marks)
c. Explain in detail how the relationship between the company and the chosen supplier should be controlled if the directors are considering outsourcing key inputs. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Costing, Labour Hours, Outsourcing, Overtime, Production planning, Profit Maximization
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2018

PM – Mar/Jul 2020 – L2 – Q1 – Decision Making and Capacity Constraints for Benco Limited

Evaluate which of two components, K or T, should be produced and sold to maximize profit based on given cost and capacity constraints.

Question

Benco Limited produces two critical components, K and T, both of which are used in petroleum refinery. The components are made by passing each one through two fully automatic computer-controlled machine lines – A and B – with respective maximum capacity of 13,600 hours and 15,360 hours. The following details are available:
(i) Due to production constraints, the company has decided to produce only one of the two components, K or T, for the next period but not both.
(ii) Market demand is limited to 59,200 units of K and 80,000 units of T.
(iii) Products unit data:

(iv) The maximum quantity of material X available is 136,000kg. The material is purchased at ₦50 per kg.
(v) Variable machine overhead for machine line A and line B is estimated at ₦500 and ₦600 per machine hour respectively.
(vi) The company operates a JIT system.

Required:
a. Calculate which of the components, K or T, should be produced and sold in the year in order to maximise profits. You should state the number of units to be produced and sold and the resulting contribution. (10 Marks)
b. Benco Limited wishes to consider additional sales outlets which could earn contribution at the rate of ₦400 and ₦600 per machine hour for machine line A and line B respectively. Such additional sales outlets would be taken up only to utilise any surplus hours not required for the production of the components. Calculate whether Benco Limited should now produce either component K or T and what quantity to be produced and the resulting contribution. (9 Marks)
c. Suggest ways in which the company may overcome the capacity constraints which limit the opportunities available to it in the year, and indicate the types of costs which may be incurred in overcoming each constraint. (10 Marks)

d. Illustrate the use of opportunity cost in the charging of each of material, labour and overhead elements in comparison with historic absorption cost elements. For each element, you should illustrate your answer with figures of your choice.
(11 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Analysis, Decision Making, Marginal Costs, Profit Maximization, Variable Costs
Level: Level 2

Topic: Decision making techniques
Series: MAR/JULY 2020

Determine the optimal transfer pricing for consulting services between divisions within KayCee Ltd based on varying capacity scenarios.

Question

The Management Information System (MIS) division of KayCee Ltd provides consulting services to its clients as well as to other divisions within the group. Consultants always work in teams of two on every consulting day. Each consulting day is charged to external clients at GH¢750, which represents cost plus a 150% profit markup. The total cost per consulting day has been estimated to be 80% variable and 20% fixed.

The director of the Human Resources (HR) division of KayCee Ltd has requested the services of two teams of consultants from the MIS division on five days per week for a period of 48 weeks, and has suggested that she meets with the director of the MIS division in order to negotiate a transfer price. The director of the MIS division has responded by stating that he is aware of the limitations of using negotiated transfer prices and intends to charge the HR division GH¢750 per consulting day.

The MIS division always uses Internal video-conference equipment on all internal consultations which would reduce the variable costs by GH¢50 per consulting day.

Note: The conference equipment can only be used when providing internal consultations.

Required:

a) Calculate and discuss the transfer prices per consulting day at which the MIS division should provide consulting services to the HR division in order to ensure that the profit of KayCee Ltd is maximized in each of the following situations:

i) Every pair of consultants in the MIS division is 100% utilized during the required 48-week period in providing consulting services to external clients, i.e. there is no spare capacity.
ii) There is one team of consultants who, being free from other commitments, would be available to undertake the provision of services to the HR division during the required 48-week period. All other teams of consultants would be 100% utilized in providing consulting services to external clients.
iii) A major client has offered to pay the MIS division GH¢264,000 for the services of two teams of consultants during the required 48-week period.

(14 marks)

b) Explain THREE (3) limitations of negotiated transfer prices.

(6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Consulting, Internal services, MIS division, Opportunity Cost, Profit Maximization, Transfer Pricing
Level: Level 2

Topic: Transfer Pricing
Series: NOV 2023

MA – Mar 2023 – L2 – Q2a – Standard costing and variance analysis

Prepare a production plan to maximize profit using throughput approach with given labor hours and demand.

Question

The statement below relates to the costs and selling price of a unit of three products produced by a company:

Additional information provided:
Labour rate per hour for all the products is GH¢8
Demand for the year in units: A – 4,000; B – 2,500; C – 3,600
Available labour hours: 65,000
Required:
i) Prepare a production plan that will maximize profit using the throughput approach.
(9 marks)
ii) Calculate the Through Put Accounting Ratio for each product assuming that the conversion
cost is based on the annual demand.
(6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Management, Limiting factors, Production planning, Profit Maximization, Throughput Accounting

Topic: Throughput Accounting
Series: MAR 2023

MA – Nov 2019 – L2 – Q2a – Decision-Making Techniques

Explains how profit maximization leads to shareholder wealth maximization and how constraints, satisficing, and optimizing affect decision-making.

Question

a) Management Accountants are often engaged in decision-making processes that would yield optimal results, given a limited amount of resources available. Such decisions are expected to yield to shareholder wealth maximization through the maximization of profits. Unfortunately, however, constraints sometimes lead to satisficing rather than optimizing decision making.

Required:
i) Explain how profit maximization can lead to shareholder wealth maximization. (4 marks)

ii) Explain how constraints, satisficing, and optimizing affect the management accountant’s decision-making. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Constraints, Decision Making, Optimizing, Profit Maximization, Satisficing, Shareholder Wealth Maximization

Topic: Decision making techniques
Series: NOV 2019

QT – May 2019 – L1 – Q7a – Linear Programming

Formulate a linear programming model for maximizing profit using decision variables and constraints.

Question

Joycarpap Ltd manufactures and sells three models of affordable toys: Car, Joy, and Pap. Each model requires a specific amount of fabrication hours, material worth, and assembly hours as shown in the table below:

There are 210 fabrication hours available, 170 hours of assembly available, and materials worth GH¢200 in stock. Market research conducted by the company revealed that demand for the toys is such that, in whatever combination of the three models produced, all of the output can be sold within a week.

Each Car contributes GH¢15 to profit, each Joy contributes GH¢20 to profit, and each Pap contributes GH¢14 to profit. Using $X_{1}$ , $X_{2}$ , $X_{3}$ as decision variables, and $S_{1}$ , $S_{2}$ , $S_{3}$ as slack variables, and $P$ as total profit:

Required:
i) Formulate a linear programming problem. (4 marks)

ii) Set up the initial Simplex Tableau. (4 marks)

iii) Determine the total profit in the first iteration. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Constraints, Decision Variables, Linear Programming, Profit Maximization, Simplex Method
Level: Level 1

Topic: Linear Programming
Series: MAY 2019

QT – May 2017 – L1 – Q4b – Linear Programming

Formulate a linear programming model for maximizing profit.

Question

Managers within a subsidiary company in a conglomerate want to know how to maximize profit from two types of products, X and Y. Each product X requires one hour of labor and six liters of molding material, whereas each product Y requires two hours of labor and five liters of molding material. The total labor hours available for each week is 40, and the total amount of molding material each week is 150 liters. The profit contribution from product X is GH¢20 and from product Y is GH¢30.

Required:

Formulate the linear programming model for the problem.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Linear Programming, Model Formulation, Profit Maximization
Level: Level 1

Topic: Linear Programming
Series: MAY 2017

QT – Nov 2018 – L1 – Q2b – Elements of Calculus

Determine the price and quantity that maximize revenue and profit, and compute the maximum profit for Renes Trading Company.

Question

Renes Trading Company sells $q$ kente strips per month at $p$ Ghana Cedis per kente strip. The demand function for kente strips is given by $p = 300 - 0.02 q$ . The kente strips cost GH¢30 per strip to manufacture. There are fixed costs of GH¢9,000 per month.

Required:
(i) Determine the price per kente strip that will maximize revenue. (4 marks)
(ii) Determine the quantity where profit is maximized. (4 marks)
(iii) Calculate the maximum profit. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Differentiation, Elasticity of Demand, Profit Maximization, Revenue Maximization
Level: Level 1

Topic: Elements of Calculus
Series: NOV 2018

QT – Nov 2015 – L1 – Q7b – Elements of Calculus

Determine the number of TV sets a manufacturer should produce to maximize profit and calculate the maximum profit.

Question

A TV manufacturer finds that he can sell $x$ units per week at a price $p = 250 - 0.5 x$ each. His cost of production of $x$ TV sets per week is given by $C = 240 + 2 x$ .

Required:
(i) Determine how many sets per week he should produce to maximize his profit. (5 Marks)
(ii) Determine the maximum profit. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Marginal Cost, Marginal Revenue, Production, Profit Maximization, TV Sets
Level: Level 1

Topic: Elements of Calculus
Series: NOV 2015

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

Question

One of the key considerations for multinational companies is to decide on the price at which goods and services are transferred from one member of a group to another.

Kofas Ltd has been operating in four countries: Ghana, Nigeria, UK, and USA. The parent company and the subsidiaries have decided to use a transfer pricing policy.

Required:
You have been approached as a consultant to advise on the internal and external factors that will facilitate the transfer of goods and services from one member of the group to another. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: External factors, Internal Factors, multinational companies, Profit Maximization, Transfer Pricing
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: MAY 2017

Question Tag: Profit Maximization

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

MA – Nov 2024 – L2 – Q5b – Profit Maximization and Batch Selection

Determination of the optimal number of printer batches to import and sell to maximize profit.

You're reporting an error for "MA – Nov 2024 – L2 – Q5b – Profit Maximization and Batch Selection"

MA – Nov 2024 – L2 – Q5a – Limiting Factor Decision and Profit Maximization

Determination of the optimum production plan considering scarce resources.

You're reporting an error for "MA – Nov 2024 – L2 – Q5a – Limiting Factor Decision and Profit Maximization"

BMF – Nov 2020 – L1 – SA – Q12 – Basics of Business Finance and Financial Markets

Identify the term for strategies maximizing profits through innovative financial methods.

You're reporting an error for "BMF – Nov 2020 – L1 – SA – Q12 – Basics of Business Finance and Financial Markets"

PM – May 2024 – L2 – SC – Q7 – Cost-Volume-Profit (CVP) Analysis

Analysis of production constraints to determine optimal production levels and profit maximization using contribution analysis.

You're reporting an error for "PM – May 2024 – L2 – SC – Q7 – Cost-Volume-Profit (CVP) Analysis"

PM – May 2024 – L2 – SA – Q1 – Costing Systems and Techniques

Calculation of machine utilization rates, identification of bottlenecks, and application of throughput accounting.

You're reporting an error for "PM – May 2024 – L2 – SA – Q1 – Costing Systems and Techniques"

PM – Nov 2020 – L2 – Q2 – Costing Systems and Techniques

Analyze the profit-maximizing output using marginal costing and throughput accounting for two products, and compare both methods.

You're reporting an error for "PM – Nov 2020 – L2 – Q2 – Costing Systems and Techniques"

PM – Nov 2021 – L2 – Q3 – Costing Systems and Techniques

Calculate profit-maximizing output using both marginal and throughput accounting principles and compare the approaches for Kahkiri Limited.

You're reporting an error for "PM – Nov 2021 – L2 – Q3 – Costing Systems and Techniques"

PM – Nov 2021 – L2 – Q1 – Budgeting and Budgetary Control

Explore material input constraints, determine optimal production, and evaluate outsourcing and penalties for non-fulfillment of orders.

You're reporting an error for "PM – Nov 2021 – L2 – Q1 – Budgeting and Budgetary Control"

QTB – Nov 2015 – L1 – SB – Q2c – Mathematics of Business Finance

Find the level of output at which profit is maximized using given revenue and cost functions.

You're reporting an error for "QTB – Nov 2015 – L1 – SB – Q2c – Mathematics of Business Finance"

BMF – May 2018 – L1 – SB – Q5a – Basics of Business Finance and Financial Markets

Discusses weaknesses of commonly-used corporate financial objectives.

You're reporting an error for "BMF – May 2018 – L1 – SB – Q5a – Basics of Business Finance and Financial Markets"

PM – Nov 2018 – L2 – SA – Q1 – Decision-Making Techniques

Maximize profit for JJ Company by determining the optimal production plan and advising on Year 2 scenarios for fulfilling demand.

Year 1

Year 2

Required:

You're reporting an error for "PM – Nov 2018 – L2 – SA – Q1 – Decision-Making Techniques"

PM – Mar/Jul 2020 – L2 – Q1 – Decision Making and Capacity Constraints for Benco Limited

Evaluate which of two components, K or T, should be produced and sold to maximize profit based on given cost and capacity constraints.

You're reporting an error for "PM – Mar/Jul 2020 – L2 – Q1 – Decision Making and Capacity Constraints for Benco Limited"

Determine the optimal transfer pricing for consulting services between divisions within KayCee Ltd based on varying capacity scenarios.

You're reporting an error for "Determine the optimal transfer pricing for consulting services between divisions within KayCee Ltd based on varying capacity scenarios."

MA – Mar 2023 – L2 – Q2a – Standard costing and variance analysis

Prepare a production plan to maximize profit using throughput approach with given labor hours and demand.

You're reporting an error for "MA – Mar 2023 – L2 – Q2a – Standard costing and variance analysis"

MA – Nov 2019 – L2 – Q2a – Decision-Making Techniques

Explains how profit maximization leads to shareholder wealth maximization and how constraints, satisficing, and optimizing affect decision-making.

You're reporting an error for "MA – Nov 2019 – L2 – Q2a – Decision-Making Techniques"

QT – May 2019 – L1 – Q7a – Linear Programming

Formulate a linear programming model for maximizing profit using decision variables and constraints.

You're reporting an error for "QT – May 2019 – L1 – Q7a – Linear Programming"

QT – May 2017 – L1 – Q4b – Linear Programming

Formulate a linear programming model for maximizing profit.

You're reporting an error for "QT – May 2017 – L1 – Q4b – Linear Programming"

QT – Nov 2018 – L1 – Q2b – Elements of Calculus

Determine the price and quantity that maximize revenue and profit, and compute the maximum profit for Renes Trading Company.

You're reporting an error for "QT – Nov 2018 – L1 – Q2b – Elements of Calculus"

QT – Nov 2015 – L1 – Q7b – Elements of Calculus

Determine the number of TV sets a manufacturer should produce to maximize profit and calculate the maximum profit.

You're reporting an error for "QT – Nov 2015 – L1 – Q7b – Elements of Calculus"

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

You're reporting an error for "AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques"

Our offerings

Contact Info

Customer

Get In Touch

NBC Institute

admin