Profit Optimization – NBC Institute

MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

Question

ZUBEY LIMITED manufactures 4 homogeneous products A, B, C, and D with the following projections for the coming year:

The market can only absorb a maximum of 250,000 units of whatever mix in a year.

Assume no opening or closing stocks.

Required:

a. Compute the optimal production plan. (9 Marks)

b. Prepare the income statement arising from (a) above. (11 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Management, Decision Making, Production planning, Profit Optimization
Level: Level 1

Topic: Decision making techniques
Series: MAR/JULY 2020

MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

Question

Zumah Ltd manufactures and sells two complementary products: Hyline and Glycerin in the ratio 3:2. The result for the just ended period showed the following:

Product	Hyline	Glycerin
Selling price (GH¢)	20	15
Contribution/sales ratio	60%	40%
Profit/ (loss) (GH¢)	97,200	(3,600)

Joint fixed costs of GH¢180,000 are apportioned in proportion to the number of units of each product sold.

The company is in the process of preparing the budget for the coming year and is desirous of improving the performance of Glycerin. Therefore, the following proposals are being considered for implementation:

Increase the price of Glycerin by 25% in expectation that the quantity demanded will reduce by 10%; or
Retool the production process, which will result in a reduction of joint fixed costs by 15% and an increase in variable costs of each product by 10%; or
Introduce proposals 1 and 2.

Required:

a) Determine the units of each product sold, and hence, prepare the profit statement for the just ended period.
b) Advise the management of Zumah Ltd as to which proposal to implement with a view to optimizing profits.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution margin, CVP Analysis, Fixed Costs, Profit Optimization, Sensitivity Analysis
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: NOV 2017

MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

Question

ZUBEY LIMITED manufactures 4 homogeneous products A, B, C, and D with the following projections for the coming year:

The market can only absorb a maximum of 250,000 units of whatever mix in a year.

Assume no opening or closing stocks.

Required:

a. Compute the optimal production plan. (9 Marks)

b. Prepare the income statement arising from (a) above. (11 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Management, Decision Making, Production planning, Profit Optimization
Level: Level 1

Topic: Decision making techniques
Series: MAR/JULY 2020

MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

Question

Zumah Ltd manufactures and sells two complementary products: Hyline and Glycerin in the ratio 3:2. The result for the just ended period showed the following:

Product	Hyline	Glycerin
Selling price (GH¢)	20	15
Contribution/sales ratio	60%	40%
Profit/ (loss) (GH¢)	97,200	(3,600)

Joint fixed costs of GH¢180,000 are apportioned in proportion to the number of units of each product sold.

Increase the price of Glycerin by 25% in expectation that the quantity demanded will reduce by 10%; or
Retool the production process, which will result in a reduction of joint fixed costs by 15% and an increase in variable costs of each product by 10%; or
Introduce proposals 1 and 2.

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contribution margin, CVP Analysis, Fixed Costs, Profit Optimization, Sensitivity Analysis
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: NOV 2017

Question Tag: Profit Optimization

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MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

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MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

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MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

You're reporting an error for "MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis"

MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques

Determine the optimal production plan and prepare the income statement based on the given production constraints and sales data.

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SB – Q3 – Decision-Making Techniques"

MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Analyze the profit statement for two complementary products and evaluate the impact of various proposals on profit optimization.

You're reporting an error for "MA – Nov 2017 – L2 – Q4 – Cost-volume-profit (CVP) analysis"

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