ICAN 2026 Performance Management | Mixed

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.

Viana Nig. Oil palm processing Plant is planning annual turnaround maintenance of the facility that will require facility shut down every three months. The plant management has decided to engage an expert maintenance outfit that will carry out the routine inspection and maintenance every three months. During the first year's operation, the costs of shut- down have been as follows: Quarter Shut-Down Cost I N720,000 2 N576,000 3 N540,000 4 N540,000 The management accountant attempts to forecast maintenance costs for the coming year and on examining the above data, it appears that these costs have been steadily decreasing. The plant engineers have suggested that this is probably due to the fact that the maintenance engineers are becoming more used to the procedures involved and also the fact that the plant itself is gradually settling down, after initial operational problems. If this is the case, an appropriate learning curve could explain the situation which has been observed.

Oforma Nigeria Limited has two operating divisions, Lagos division and Enugu division that are treated as profit centres for the purpose of performance reporting. Lagos division makes two products, Gat-R and Mat-R. Gat-R is sold to external customers for ₦620 per unit. Mat-R is a part-finished item that is sold only to Enugu division. Enugu division can obtain the part-finished item from either Lagos division or from an external supplier. The external supplier charges a price of ₦550 per unit. The production capacity of Lagos division is measured in total units of output of Gat-R and Mat-R. Each unit requires the same direct labour time. The costs of production in Lagos division are as follows: Gat- R ₦ Mat-R ₦ Variable cost 460 480 Fixed cost 190 190 Full cost 650 670.

Acop Nigeria Limited manufactures four products which are initially processed together at Process 1 before further processing using different processes. The four products are Pat, Pet, Pan and Pea. Pat is further processed in Process 2, Pet in Process 3, Pan in Process 4 and Pea in Process 5. Process 1 has a 10% loss whereas no process loss is expected from Processes 2 to 5. Process 1 scraps are sold at ₦50 per kg. Process 1 total costs are apportioned to the products based on the quantities of each product at spilt off point. Production overhead is absorbed as a percentage of direct wages.

Abayomi Plc produces and sells two major products, A and B. The budgeted income statement for the year to December 31, 2022 is given below: Products A B Total N’000 N’000 N’000 Sales 8,400 25,200 33,600 Production costs: Materials (2,240) (5,040) (7,280) Direct labour (1,120) (3,360) (4,480) Variable overheads (1,120) (2,240) (3,360) Fixed overheads (560) (1,680) (2,240) Total cost (5,040) (12,320) 17,360 Gross Profit 3,360 12,880 16,240 Fixed selling and Adm. (8,320) Net profit before tax 7,920 The budgeted selling prices of the products are: A ₦120 B ₦180.