Can anyone help with decision making query?

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
:cry:
Can anyone help??
We have been given homework where we have to decide whether to continue to produce a product eg Product X product Y product Z we have been given the sales revenue, worked out contribution and profit for each one. That bit is fine, it then says they are to introduce a new product which would increase production of product X by 10% but the production volume units are not given in the question it does not say how many units of each product are being produced for each product. How is this worked out. How can I increase production by 10% if I don't know the original production units produced. This homework is not out of any books, I am using Osbourne books and all examples in there tell you the production units
Can anyone help? please

Thank you
CB

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Can anyone help with decision making query?

    It's hard to say without being able to see all the data you had.

    What are you actually being asked to calculate?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Can anyone help with decision making query?

    Thank you for your response
    I am being asked to prepare a revised costing statement if a new product was introduced it states in the question that production of product X would increase by 10% if this new product was introduced, material cost would increase by 15% Labour 20% etc
    X Y Z
    Sales Value £100,000 £200.000 £300.000
    Mat 10,000
    Lab 30,000
    o/hs 20,000
    Profit 40,000
    But it does not give me the production units in the question (ie how many units of the product they are making)how is this worked out. I have just given figures for prod X
    Does it make any sense now
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Can anyone help with decision making query?

    I think I see; it shouldn't make any difference that you don't know the production units, because you already have the original figures and the amounts to increase them by.

    In this case:
    Sales £100,000 +10% = £110,000
    Materials £10,000 + 15% = £11,500

    Remember if the overheads are fixed they won't change, and you will have to calculate profit based on the new costs.

    The way this question is structured seems strange to me, where does it come from?

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