throughput accounting

Direct material (kg) per unit 2.5 3.5
Direct material cost ($ ) per unit 2.50 4.50
Variable production overhead cost ($ ) per unit 25 8
Overall hours per product unit (hours) per unit 0.5 0.25
Budgeted production (units) 125,000 65,000
Budgeted sales 115,000 55,000
Selling price ($) 120 90
Maximum demand above budgeted sales 20% 15%
The factory produces and sells two products X and Y through the same production process. Total
fixed production overhead cost is $1,450,000 and is absorbed by products X and Y at average
rate per hour based on budgeted production. The assembly process has maximum capacity of
2,500 hours limiting the overall estimated production and sales of products X and Y. The assembly
process’ hours required are 0.02 per unit for product X and 0.03 per unit for Y.
Required
i. Calculate the mix in units of products X and Y maximizing the net profit and the value in $ of the
maximum net profit (6 marks).