Question

Q.1

Amben LTD, makes a product, the Arigato, which has the following unit costs: Direct materials $8, Direct labour cost $4, variable production cost $2. The company has fixed selling price at $30 per unit. At the beginning of September 2020, there were no opening inventories and production during the month was 20,000 units. Fixed costs for the month were $45,000 (production administration, sales, and distribution). There were no variable marketing costs.

Required

Calculate the contribution and profit for September 2020, using marginal costing principles, if sales were as follows.

(a)     10,000 Arigato     (b)20,000 Arigato (c) 15,000 Arigato

Answer 1

Computation of Contribution Margin & Profit- Amen Ltd.
Sales Qty	10000	20000	15000
Sales (a)	$300,000	$600,000	$450,000
Less: Variable cost
Direct Material	$80,000	$160,000	$120,000
Direct Labour Cost	$40,000	$80,000	$60,000
Variabel production Cost	$20,000	$40,000	$30,000
Total Variable Cost (b)	$140,000	$280,000	$210,000
Contribution (c=a-b)	$160,000	$320,000	$240,000
Less: Fixed Cost (d)	$45,000	$45,000	$45,000
Profit (c-d)	$115,000	$275,000	$195,000

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