Quiz no: 03

Q no: 01 Define backflush costing? Briefly discuss its merits and demerits? (Marks = 4)
Q no: 02
Corrie produces three products, X, Y and Z. The capacity of Corrie's plant is restricted by
process alpha. Process alpha is expected to be operational for eight hours per day and can
produce 1,200 units of X per hour, 1,500 units of Y per hour, and 600 units of Z per hour.
Selling prices and material costs for each product are as follows.
Product Selling price Material Cost Throughput Contribution
$ per unit $ per unit $ per unit
X 150 80 70
Y 120 40 80
Z 300 100 200

Conversion costs are $720,000 per day.

Required
(a) Calculate the profit per day if daily output achieved is 6,000 units of X, 4,500 units of Y and
1,200 units of Z.
(b) Calculate the TA ratio for each product.
(c) Give proper interpretation? (Marks = 8)
Q no: 03 The price of a good is $1.20 per unit and annual demand is 800,000 units. Market
research indicates that an increase in price of 10 cents per unit will result in a fall in annual
demand of 75,000 units. What is the price elasticity of demand? (Marks = 5)
Q no: 04 Discuss any three variables which influence demand? (Marks = 03)