A company manufactures a single product which has the following cost structure based on a production sales budget of 10,000 units. £ Materials (4 kg at £3 per kg) 12 Direct labour hours (5 hours at £7 per hour) 35 Variable overheads are recovered at £8 per direct labour hour. Other costs include Factory fixed overheads 120,000 Selling and distribution overheads 160,000 Fixed administration overheads 80,000 The selling and distribution overheads include a variable element due to a distribution cost of £2 per unit. Selling price is £129. How many units have to be sold for the class to breakeven?
A company manufactures a single product which has the following cost structure based on a production sales budget of 10,000 units. £ Materials (4 kg at £3 per kg) 12 Direct labour hours (5 hours at £7 per hour) 35 Variable overheads are recovered at £8 per direct labour hour. Other costs include Factory fixed overheads 120,000 Selling and distribution overheads 160,000 Fixed administration overheads 80,000 The selling and distribution overheads include a variable element due to a distribution cost of £2 per unit. Selling price is £129. How many units have to be sold for the class to breakeven?
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 structure based on
a production sales budget of 10,000 units.
£
Materials (4 kg at £3 per kg) 12
Direct labour hours (5 hours at £7 per hour) 35
Variable
Other costs include
Factory fixed overheads 120,000
Selling and distribution overheads 160,000
Fixed administration overheads 80,000
The selling and distribution overheads include a variable element due to a distribution cost
of £2 per unit. Selling price is £129.
How many units have to be sold for the class to breakeven?
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