CMA Intermediate · Management Accounting · Applications of Marginal Costing in Short Term Decision Making
Gupta Toys Ltd has 5,000 labour hours available. Product M: contribution ₹120 per unit, 4 hours. Product N: contribution ₹100 per unit, 2 hours. Demand: M 800 units, N 1,000 units. Maximum contribution?
The correct maximum contribution is ₹1,90,000, which is not among the options, so this question is invalid.
- A₹1,00,000
- B₹1,10,000Correct
- C₹96,000
- D₹1,26,000
Explanation
Per hour: M = 120/4 = ₹30; N = 100/2 = ₹50. N first: 1,000 units use 2,000 hours giving ₹1,00,000. Remaining 3,000 hours make 750 units of M giving ₹90,000. Total = ₹1,90,000, which is not listed.
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