Q1) XYZ Company has one machine on which it can make either of two products, Y or Z. Sales demand is unlimited for both products at presentprices. Product Y needs 1 hour of machine time per unit of output and Product Z needs 2 hours of machine time per unit of output. Following information sum-up per-unit costs of products Y and Z.
| |
Y |
Z |
| Selling price |
$75 |
$80 |
| DM |
30 |
5 |
| DL |
20 |
10 |
| VOH |
10 |
20 |
| FOH |
5 |
30 |
a) Based a variable costing approach, how would you maximize profits? Justify your answer.
b) Based on throughput costing approach, how would you maximize profits? Justify your answer.
c) Which costing method above gives best answer to profit maximization problem and explain why.