You are required to suggest which product should be processed and sold.

You are required to suggest which product should be processed and sold.

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Your company produces two products P and Q. The relevant data per unit of output are given as follows:

P (Rs.)

Q (Rs.)

Cost of Direct Material

28.00

13.00

Direct Labour

15.00

25.00

Variable Factory Overheads

25.00

12.50

Fixed Factory Overheads

10.00

5.00

Variable Selling Expenses

14.00

10.00

Total Cost

92.00

65.50

Selling Price

100.00

70.00

Profit

8.00

4.50

Factory overheads are applied on the basis of machine hour. The existing plant and infrastructure will allow production and sale of either P or Q. Both the products are processed through the same production centre.

You are required to suggest which product should be processed and sold.

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