A company produces and sells two products A and B. The company incurs Rs. 1,00,000 per annum towards fixed overheads and has provided the following further information:
|
|
Product A Rs. per Unit |
Product B Rs. per Unit |
|
Direct Materials @ Rs. 50 per kg |
200 |
250 |
|
Direct Wages @ Rs. 10 per hour |
100 |
150 |
|
Variable Overheads |
100 |
150 |
|
Selling Price |
520 |
715 |
Depending on the availability of raw materials and labour hours, the company considers the following two alternative sales mixes:
- 1,000 units of A and 600 units of B.
- 600 units of A and 1,000 units of B.
Recommend which of the sales mixes should be adopted by the company.