Ican 2024 Performance Management Question 7

Jumbo Tailors Nigeria Limited manufactures three unique wears for which the maximum revenue for the coming year is estimated as follows: N Trousers 8,250,000 Jackets 9,880,000 Skirts 12,390,000 Summarised unit cost data are as follows: Product Trousers Jackets Skirts N N N Direct material 1,000 900 700 Direct Labour 500 450 350 Variable costs 800 1,600 1,000 Fixed costs 250 500 400 Total costs 2,550 3,450 2,450 The allocation of fixed costs was derived from last year’s production level and this may be reviewed, if current output plans are different. Estimated selling prices are: Product Price N Trousers 3,300 Jackets 3,800 Skirts 2,950 The products are processed on sewing machines housed in a building of three blocks. Block A contains type I machine which has an estimated maximum machine hour capacity of 39,200 hours available in the forthcoming year with fixed overhead cost of N1,960,000 per annum. Block B contains type II machine of which 20,000 machine hours are estimated in the forthcoming year with a fixed overhead cost of N1,500,000 per annum. Block C also contains type II machine which also has an estimate of 16,000 machine hours available in the forthcoming year. The fixed overhead cost of N740,000 is estimated per annum for Block C. The required machine hours for one unit of output for each Jeans on each type of machine are as follows: Product Trousers Jackets Skirts Type I machine 2 hours 4 hours 6 hours Type II machine 3 hours 6 hours 2 hours