Accounting Question

[cs]

 I have a question ,June 2009 paper 22 CIE,

Alberta Limited is now considering extending the product range by adding two products,
cups and saucers. The fixed costs would double to $480 000 if any new product was
introduced.

The current workforce is operating at full capacity in the production of the plates. There is,
however, machine capacity available to undertake the production of both cups and saucers.
Alberta Limited extended their product range by adding both products.

What if the question said The current workforce is operating at full capacity in the production of the plates. and did not mention the machine capacity, we have to calculate the one that make the most contribution by using the optimum use of scarce resources right? or am I wrong?

[S.M.A.T]

I have a question ,June 2009 paper 22 CIE,

Alberta Limited is now considering extending the product range by adding two products,
cups and saucers. The fixed costs would double to $480 000 if any new product was
introduced.

The current workforce is operating at full capacity in the production of the plates. There is,
however, machine capacity available to undertake the production of both cups and saucers.
Alberta Limited extended their product range by adding both products.

What if the question said The current workforce is operating at full capacity in the production of the plates. and did not mention the machine capacity, we have to calculate the one that make the most contribution by using the optimum use of scarce resources right? or am I wrong?

This part of the question means- Alberta limited has available capacity to produce all three item per annum in full capacity(have available workers or machines to produce all 100000 cups and 60000 saucers).


YES U R RIGHT
In this question(b) they asked for the maximum profit of all three item, so they will say something about the capacity to produce sauce and cups like 'the machine has capacity to produce 90000 cups and 60000 saucers ',so now u will calculate profit for 90000 and 60000 unit



Hope this helps

[cs]

Thank you Asif.. will +REP when i can..