Reference no: EM132714762

Question - ABC Company ("ABC") is Namibian based company that produces three products, A, B, and C through a process costing system. All the three products pass through process 1 which only has an hourly capacity to produce 1 200 units of A, 1 500 units of B and 600 units of C. The process operates eight hours in a day. The following information relates to the three products: Product A; Selling price per is unit $150 &Material cost per unit is $70, Product B; Selling price per unit $120 &Material cost per unit is $40 while Product C; Selling price per unit is $300 &Material cost per unit is $100. The three products combined incur a conversion cost of $720 000 per day.

Required -

1) Determine the total amount of profit available to ABC if they are able to produce 6 000 units of A, 4 500 units B and 1 200 units of C per day?

2) Calculate the throughput ratio for each product?

3) Assuming the three products have unlimited demand, advise ABC on how to optimise their production?