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Box End Products Ltd. makes three electronic products for the consumer market. It currently makes three products, Product A, Product B and Product C. Cost and sales Information are given in table 4.1. Materials (6) Labour hours 2.7 Product A Product B Product C Sales Selling price volume 2 15000 40.00 7000 44.00 8500 43.50 6.50 5.50 14.50 3.5 25 Table 4.1 Product details The company overheads are listed in table 42. These overheads are required irrespective of what is made or not made. Overhead Annual cost Good Inwards 24.000 Despatch 20,000 Finance, order 45,000 processing, etc. Sales and Marketing 35.000 Management 45.000 Table 4.2 Company Overheads The working week is 37 hours. There are 46 working weeks to the year however all production workers, of which there are 51, are on full time contracts and are hence paid for 52 weeks of the year. Each employee is paid 8.50/hour. Problems (a) [2 marks each = Marks] What is the Gross Margin for each of the three products? (b) [4 Marks] What is the annual profit the company is currently making? (Marks) If all the overheads are to be recovered against labour hours what is the hourly overhead tate? [Marks] Using this information what is the fully absorbed cost and profit per product of each product? 3 Marks) How much additional profit does the company make if it were to make one more of each product? (9) 12 Marks) Which product should it make more of? (0)

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