A company manufactures a single product which has the following cost and selling price structure per unit: GH¢ GH¢ Selling Price 120 Direct Material 22 Direct Labour 36 Variable overheads 14 Fixed overhead 12 84 Profit 36 The fixed overhead absorption rate is based on a normal capacity of 2000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for next month are 2,200 units You are required to calculate: a) the breakeven point, in sales units per month; b) the margin of safety for next month; c) the budgeted profit for next month; d) the sales required to achieve a profit of GHS96,000 in a month.
A company manufactures a single product which has the following cost and selling price structure per unit: GH¢ GH¢ Selling Price 120 Direct Material 22 Direct Labour 36 Variable overheads 14 Fixed overhead 12 84 Profit 36 The fixed overhead absorption rate is based on a normal capacity of 2000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for next month are 2,200 units You are required to calculate: a) the breakeven point, in sales units per month; b) the margin of safety for next month; c) the budgeted profit for next month; d) the sales required to achieve a profit of GHS96,000 in a month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company manufactures a single product which has the following cost and selling price structure per unit:
GH¢ GH¢
Selling Price 120
Direct Material 22
Direct Labour 36
Variable overheads 14
Fixed overhead 12 84
Profit 36
The fixed overhead absorption rate is based on a normal capacity of 2000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for next month are 2,200 units
You are required to calculate:
a) the breakeven point, in sales units per month;
b) the margin of safety for next month;
c) the budgeted profit for next month;
d) the sales required to achieve a profit of GHS96,000 in a month.
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