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FINANCIAL ACCOUNTING
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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Please use the data in ex 3 to solve 3.1
EXERCISE 3 The administrative director of Beta Spa, has given to the general director the following table with three products' costs of the company: Total costs Direct materials cost (€) 4.500€ Direct labor cost (€) Specific fixed costs (€) General fixed costs (€) Total 5.000 € 3.500 € 2.613 € 15.613 € S.000 € 6.000 € 4.000 € 4.645 € 22.645 € 3.000 € 2.000 € 1.500€ 1.742 € S.242 € Total 15.500€ 13.000 € 9.000 € 9.000€ 46.500 € Units produced for each one are: Units 1500 2000 1000 Specific fixed costs are avoidable for the interruption of the referred product's production. Direct materials cost and direct labor cost are variable. General fixed costs are allocated on the total of direct materials cost (15.500 €). All data are about 2018.
Transcribed Image Text:EXERCISE 3 The administrative director of Beta Spa, has given to the general director the following table with three products' costs of the company: Total costs Direct materials cost (€) 4.500€ Direct labor cost (€) Specific fixed costs (€) General fixed costs (€) Total 5.000 € 3.500 € 2.613 € 15.613 € S.000 € 6.000 € 4.000 € 4.645 € 22.645 € 3.000 € 2.000 € 1.500€ 1.742 € S.242 € Total 15.500€ 13.000 € 9.000 € 9.000€ 46.500 € Units produced for each one are: Units 1500 2000 1000 Specific fixed costs are avoidable for the interruption of the referred product's production. Direct materials cost and direct labor cost are variable. General fixed costs are allocated on the total of direct materials cost (15.500 €). All data are about 2018.
Ex 3.1 Use the previous text. The general director must decide: 2000 units of product B is sold at the price of 24€ If the principle competitor cuts the price to 20€, Beta could have two alternatives: a. Take price unchanged, sell only 1500 units of B; b. Cur the price to 20€ and continue to sell 2000 units of B. What decision is the most convenient for the company?
Transcribed Image Text:Ex 3.1 Use the previous text. The general director must decide: 2000 units of product B is sold at the price of 24€ If the principle competitor cuts the price to 20€, Beta could have two alternatives: a. Take price unchanged, sell only 1500 units of B; b. Cur the price to 20€ and continue to sell 2000 units of B. What decision is the most convenient for the company?
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