The cost per unit of three products X,Y and Z of a company are given as follows:
| Particulars Don't use plagiarized sources. Get Your Custom Essay on the directors propose that z should be given up because the contribution from the pr 608711 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page | Product X | Product Y | Product Z |
| Direct material | 10 | 8 | 9 |
| Direct labour | 6 | 7 | 6 |
| Variable expenses | 4 | 5 | 3 |
| Fixed expenses | 3 | 3 | 2 |
| 23 | 23 | 20 | |
| Profit | 9 | 7 | 6 |
| Selling price | 32 | 30 | 26 |
| Number of units | 20,000 | 10,000 | 16,000 |
| Produced |
Production arrangements are such that if one product is given up, the production of the others can be raised by 50%. The directors propose that Z should be given up because the contribution from the product is the lowest. Present suitable analysis of the data indicates whether the proposal should be accepted.
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