Problem 12 A company producing products PIE and SIGMA using a single production process has...
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Accounting
Problem 12 A company producing products PIE and SIGMA using a single production process has the following cost data: PIE SIGMA Selling price per unit ($) 20 30 Variable cost per unit ($) 11 16 Machine hours required per unit of production (hrs) 1 2 Market limitation (units) 1 lakh 2.5 lakh Total machine hours available - $ 4 lakh Fixed xost per annum $26 lakh Considering the limiting factors of machine hours and market limitations, required to: (a) Indicate the best combination of products to give optimum contribution; (b) show the additional machinery requirement to be augmented on rental basis at an annual rent of $ 1.5 lakh per machine to provide additional capacity of 30,000 hours per machine; (C) change in number of machines to be rented if the annual rental charges reduce to $ 1,25,000 per machine
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