Question

Question 3 - Show calculations clearly: [10 marks A factory manufacturing industrial machine parts has been established with the capacity to produce 500 machine parts per annum. The variable costs of each machine part is as follows: direct materials Dhs.100. direct labour Dhs.50 and direct overheads is 100% of direct labour. Each machine is sold for Dhs. 250. Fixed overheads are Dhs.12,000 per annum. a) Calculate: Break-even point in units Break-even point in sales revenue P/V ratio b) If the plant operates at 100% capacity as planned, calculate: Total contribution earned Total profit

Answer 1

Solution to the above question:

In the given cass, capaci - 600 machine pour per annum vantable cout lund Materiais -OM 100 direct labous shs 50 auec Overheads thy 100% of direct cabou 2 100% SOL 28M 50 Selling Price of each machin by 250 Fixed Overheads by 12,000 per annum a) calculate i n asu - Break - even point in unie :- As we know Break-enen Point (unils) a fixed cost & (Revenue fer unit . variable cost per unit) 000 loatac, 001) - fixed cost contribution margin 000 = 12000 / 250 - (100 + 50+50) 2240 writs Break-even point in sales Revenue & We know Break - einen loint & fixed cost contribution Margin excentage = 12,000 (contribution Margin sales) = 12,000 = 50/250) 2 12,000 0.8 0.2 = OM 60,000

Plu Kalio e As we know plu Kato contribution/ sales) x 100 2 (200/250) 100 & 80% 20% (6) и Диоралаа аr 100 % са росла до ролла, calculate Total contribution earned i wa pul te z Sales - Variable coor z 250 - (100 +50+50 za 50 /unit Icial contribution carned 50 X500 Local Profil 6-2 Selling Price - Pałal cast Wudio) - 2 (250X500) - (100 +50 +50) 500 - 12,000 - CZ 125000 - 100000 - 12,000 zbhg 13,000 n goo Co © The Plant is an present operating only at 60% of i. calculate its preofit at this operating und in Al 100% capacity, Profit by 13,000 At 60% capacity, profit = (13,000/100) x60 Zou. 7800