what sales strategy could the company have planned to maximize its profit in the yea 649242

A company purchases raw materials worth Rs.11.04 lakhs and processes them into four products, P, Q, R and S, which have a unit sales value of Rs.3, Rs.9, Rs.16 and Rs.60 respectively at split off point, as they could be sold as such to other processors. However, during a year, the company decided to further process and sell products P, Q and S while R was not be processed further but sold at split off point to other processors. The processing of raw materials into the four products cost Rs.28 lakhs to the company. The other data for the year were as under:

Product

Output Units

Sales Rs. in lakhs

Additional processing costs after split off [All variable costs] Rs. in lakhs

P

10,00,000

46.00

12.00

Q

20,000

4.00

2.40

R

10,000

1.60

S

18,000

12.00

.40

You are required to work out the following information for managerial decision making.

I] If the joint costs are allocated amongst the four products on the basis of ‘Net Realizable Value’ at split off point, what would be the company’s annual income?

II] If the company had sold off all other three products at split off stage, identify the increase/ decrease in the company’s annual income as compared to I above.

III] What sales strategy could the company have planned to maximize its profit in the year?

IV] Identify the net increase in income if the strategy at III is adopted, as compared to I above?