performance.
Below is the information relating to production and sale of the
threeproducts for the year ending 31 December 2019:
Particulars
Krollers
Bags
Output sold (000)
Unit sales and costs
Selling price
Direct materials
Direct labour
Fixed production costs
Selling and distribution
Costs
Layers
Bags
1,200
Shs
1,050
Shs
Broilers
Bags
1,300
Shs
200,000 185,000 180,000
90,000 100,000
60,000 50,000
28,000 24,000
7,000 7,000
80,000
45,000
30,000
7,000
Administrative costs
5,000 5,000
6,000
Management accountant further advised that shutting down the
production line of feed concentrate for Kroilers will save 20% of the
total annual fixed costs.
Required:
Advise SIL's management, on whether the production line of
feed concentrate for Kroilers should be shut down.
(9 marks)
