A summary of a manufacturing company's profit statement for its financial year, when it is operating at 80% of capacity is given below. Sales 10,000units 320,000 Less: Direct materials 60,000 Direct wages 80,000 Production overhead: Fixed 42,000 Variable 20,000 202,000 Gross profit Less: Admin,selling& distri'tion cost: Fixed 36,000 Varying with sales volume 30,000 66,000 Net profit Required a) Establish the Break Even point b) What is the Variable cost of th company at the even point c) Management plans to operate at full capacity, estimate the margin of safety of the company.

A summary of a manufacturing company's profit statement for its financial year, when it is operating at 80% of capacity is given below. Sales 10,000units 320,000 Less: Direct materials 60,000 Direct wages 80,000 Production overhead: Fixed 42,000 Variable 20,000 202,000 Gross profit Less: Admin,selling& distri'tion cost: Fixed 36,000 Varying with sales volume 30,000 66,000 Net profit Required a) Establish the Break Even point b) What is the Variable cost of th company at the even point c) Management plans to operate at full capacity, estimate the margin of safety of the company.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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