a) | Production of | |||||
Particulars | 40,000 units | 48000 units | ||||
Sales | $ 1,400,000.00 | $ 1,680,000.00 | ||||
(40000 x $ 35) | (48000 x $ 35) | |||||
Less: | Variable Costs: | |||||
D.Materials | $ 320,000.00 | $ 384,000.00 | ||||
(40000 x $ 8) | (48000 x $ 8) | |||||
D.Labor | $ 360,000.00 | $ 432,000.00 | ||||
(40000 x $ 9) | (48000 x $ 9) | |||||
Variable OH | $ 40,000.00 | $ 48,000.00 | ||||
(40000 x $ 1) | (48000 x $ 1) | |||||
Variable selling exp | $ 80,000.00 | $ 96,000.00 | ||||
(40000 x $ 2) | (48000 x $ 2) | |||||
Contribution | $ 600,000.00 | $ 720,000.00 | ||||
Less: | Fixed Costs: | |||||
Fixed OH | $ 280,000.00 | $ 280,000.00 | ||||
(W.N) | (W.N) | |||||
Fixed selling exp | $ 120,000.00 | $ 160,000.00 | ||||
(Given) | (120000 x 133.33333%) | |||||
Profit | $ 200,000.00 | $ 280,000.00 | ||||
As it can be seen that if the changes are brought into effect, | ||||||
the company will earn an extra profit of $ 80,000. | ||||||
So, it is recommended to bring the change. |
Workings Note: | |||||||||
Variable production OH cost per unit = | Change in total OH | = | $ 320000 - $ 310000 | ||||||
Change in units produced | 40,000 units - 30,000 units | ||||||||
= | $ 1.00 | per unit | |||||||
Therefore fixed production OH = | $ 320,000 - (40000 units x $ 1) | ||||||||
= | $280,000 |
b) | ||||
Total variable cost p.u | ||||
D.Materials | $ 8.00 | |||
D.Labor | $ 9.00 | |||
V.OH | $ 1.00 | |||
V.Selling exp | $ 2.00 | |||
Shipping cost | $ 3.50 | |||
$ 23.50 | ||||
Volume of Production | 50000 units | |||
Total Fixed Costs | ||||
Import duties, foreign permits | $ 9,000.00 | |||
Fixed OH | $ 280,000.00 | |||
Fixed selling exp | $ 120,000.00 | |||
$ 409,000.00 |
Break Even selling price = | (Total Fixed Cost / Production unit volume) + Variable cost per unit | ||||||||
= | ( $ 409,000 / 50,000 units ) + $ 23.50 | ||||||||
= | $ 31.68 |
(22 marks) QUESTION 1 Sheefeni CC normally produces and sells 40 000 units of product A each year. The company'...
Andretti Company has a single product called a Dak. The company normally produces and sells 121,000 Daks each year at a selling price of $48 per unit. The company’s unit costs at this level of activity are given below: Assume that Andretti Company has sufficient capacity to produce 163,350 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 121,000 units each year if it were willing...
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company's unit costs at this level of activity are given below: Direct mnaterials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit S 10.00 4.50 2.30 5.00 ($300,000 total) 1.20 3.50 ($210,000 total) S 26.50 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 Daks each year at a selling price of $56 per unit. The company's unit costs at this level of activity follow Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses $18.00 12.50 10.30 5.00 3.60 3.50 $420,000 total $294,000 total Total cost per unit $52.90 A number of questions relating to the production and sale of Daks...
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Andretti Company has a single product called a Dak. The company
normally produces and sells 60,000 Daks each year at a selling
price of $32 per unit. The company’s unit costs at this level of
activity are given below:
Direct
materials
$
10.00
Direct
labor
4.50
Variable
manufacturing overhead
2.30
Fixed
manufacturing overhead
5.00
($300,000
total)
Variable selling
expenses
1.20
Fixed selling
expenses
3.50
($210,000
total)
Total cost per
unit
$
26.50
A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 124,000 Daks each year at a selling price of $44 per unit. The company's unit costs at this level of activity are given below. Direct materiala Direet labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 8.50 9.00 3.40 3.00 ($372,000 total) 2.70 5.50 (5682,000 total) $32.10 A number of questions relating to the production and...
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Andretti Company hes a single product called a Dak. The company normally produces and sells 121,000 Daks each year at a selling price of $50 per unit. The company's unit costs at this level of activity are given below Direct naterials Direct labor Variable nanufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 9.50 10.00 2.90 3.00 ($363,000 total) 3.70 5.50 ($665,50e total) $34.60 A number of questions relating to the production and...