Reference no: EM132625021

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                Selling price per unit (N$)           Material cost per unit (N$)

A                            150                                           70

B                              120                                            40

C                               300                                           100

The three products combined incur a conversion cost of N$720 000 per day.

Requirement

Question 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.

Question 2: Calculate the throughput ratio for each product.

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