Ican 2026 Performance Management Question 1

Okohia Ugo Manufacturing Company limited manufactures four types of fans named, Exclusive, Premium, Deluxe, and Standard with the following codes: E, P, D and S. The Financial Controller, with the approval of the Board, wants to review the profitability of the Company’s four products and the effect of several proposals for varying the product mix. The net profit margin of 25% profitability target for each product is desired. The following information are available for 2023. Particulars E P D S Total Units Produced/Sold 20,000 24,000 36,000 40,000 Materials N4,400,000 N5,200,000 N7,600,000 N8,400,000 N25,600,000 Labour N2,000,000 N2,360,000 N3,440,000 N3,800,000 N11,600,000 Overheads N1,600,000 N1,840,000 N2,560,000 N2,800,000 N8,800,000 The products use the same materials, labour and overheads. The possible unit selling prices of individual products are given below: Particulars E P D S Amount Pr Amount Pr Amount Pr Amount Pr Selling Price N800 0.5 N500 0.3 N900 0.2 N850 0.5 N700 0.3 N540 0.5 N800 0.3 N750 0.3 N600 0.2 N600 0.2 N700 0.5 N650 0.2 The company considers specific fixed costs for each products and general fixed cost attributable to the company. The specific fixed costs are attributable to individual products while the company fixed cost is considered to be N21,665,000 per period.