Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed


Question from the Chartered Institute of Management Accountants, Intermediate



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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1
18.23 Question from the Chartered Institute of Management Accountants, Intermediate
Level, Management Accounting – Decision Making, November 2003
. (45 min)
a
If its objective is to maximise the profit of its division, then division Q will wish to maximise the number of Comps it sells at the best possible price, while satisfying


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 both its external (5000 units) and internal market (8000 units. The marginal cost for producing 13,000 Comps is shown below
£
£
Materials 25
× 13000 325,000 Labour 15
× W 924,300 Overheads
3
× 61,620 184,860 Total marginal cost
1,434,160 Units produced
13,000 Marginal cost per unit
110 Working 1 Y = ax b
Y = (20) (13,000 to the power of the log of the learning curve rate/log of 2) Y = (20) (13,000 0.152
) Y = 4.74 hours per unit Total labour hours 13,000 units
×
4.74 hours per unit = 61,620

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