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Howard Company sells two products with the following characteristics:

Product A Product B

Quantity sold$-------------------------------------------------------100,000$ units $50,000$ units

Standard cost per unit Rs$.$ Rs$.$

Fixed$----------------------------------------------------------1020$

Variable$------------------------------------------------------1040$

$2060$

Sales Price per unit $3054$

Required:

$(1)$ The profit per unit and in total for each product, assuming that the firm operates at normal capacity and that the standard cost and the actual cost are the same.

$(2)$ A decision as to whether the firm should continue its sales of both products, assuming that the fixed cost $($in total$)$ will remain the same.

$(3)$ A decision to either drop product B or add Product C$,$ assuming that facilities presently committed to B alternatively could be assigned to C$,$ that the two products are mutually exclusive and that C has the following characteristics:

Quantity sold$---------------------------------------------------------------------25,000$ units

Standard cost per unit: Rs$.$

Fixed$-------------------------------------------------------------------------------40$

Variable$---------------------------------------------------------------------------20$

$60$

Sales price per unit$-------------------------------------------------------------------50$

$(4)$ The opportunity cost associated with Product B and with Product C$.$Question $|$

Howard Company sells two products with the following characteristics:

Product A Product B

Quantity sold$--$

$100,000$ units $50,000$ units

Standard cost per unit

Sales Price per unit

Required:

$(1)$ The profit per unit and in total for each product, assuming that the firm operates at

normal capacity and that the standard cost and the actual cost are the same.

$(2)$ A decision as to whether the firm should continue its sales of both products, assuming

that the fixed cost $($in total$)$ will remain the same.

$(3)$ A decision to either drop product B or add Product C$,$ assuming that facilities presently

committed to B alternatively could be assigned to C$,$ that the two products are mutually

exclusive and that $C$ has the following characteristics:

Qu

ts

Sta

Fi

V

Sales price per unit$-$

$50$

$(4)$ The opportunity cost associated with Product B and with Product C$.$

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