b) PST Limited is a cement block production company. It has developed a new cementblock having higher strength, better appearance, and less self-weight. PST Limitedrequires a return on invested capital of 25% per annum.Budgeted sales volume (in units) -100,000 units.Variable production cost per unit - Rs. 65Fixed production cost per unit -Rs. 55Other annual fixed costs (overheads etc.) - Rs. 2,500,000Investment in machinery to produce the new block - Rs. 1,200,000Period over which investment in new machinery is to be written off - 05 years.Research and development costs for the new block - Rs. 800,000i) Calculate the unit price of the new cement block based on the above data.(05 marks)

The objective of the question is to calculate the unit price of the new cement block developed by…

Answered: b) PST Limited is a cement block…

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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b) PST Limited is a cement block production company. It has developed a new cement block having higher strength, better appearance, and less self-weight. PST Limited requires a return on invested capital of 25% per annum. Budgeted sales volume (in units) -100,000 units. Variable production cost per unit - Rs. 65 Fixed production cost per unit - Rs. 55 Other annual fixed costs (overheads etc.) - Rs. 2,500,000 Investment in machinery to produce the new block - Rs. 1,200,000 Period over which investment in new machinery is to be written off - 05 years. Research and development costs for the new block - Rs. 800,000 i) Calculate the unit price of the new cement block based on the above data. (05 marks)
A company is considering a project with a cash break-even point of 25,394 units. The selling price is RM18 a unit, the variable cost per unit is RM8, and depreciation is RM89, 800. What is the projected amount of fixed costs? Select one: a. RM253,94O b. RM306,108 c. RM324,512 d. RM316,728
Aaron's chairs is in the process of preparing a production costbudget for August. Actual costs in July for 120 chairs were:Materials cost $4,730Labor cost 2,940Rent 1,500Depreciation 2,500Other fixed costs 3,200Materials and labor are the only variable costs. If productionand sales are budgeted to change to 120 chairs in August,how much is the expected total variable cost on the Augustbudget?
What should be the unit selling price of its product to have a 20% return on investment? Baguio Corporation has these selected data: 25,000 P500,000 Units to be sold Total Cost of the units Fixed Capital investment Variable capital on sales 1,000,000 20%
Division AA makes a product that sells externally for £50.00 per unit. It has variable production cost of £22.00 per unit, variable selling and administrative cost of £7.00 per unit, fixed production cost of £1,000,000 per year, and fixed selling and administrative cost of £500,000 per year. Production capacity is 250,000 units per year. Division AA is selling all it can produce externally at £50.00 per unit. Division BB can buy externally at £48.00 per unit. Division BB needs 30,000 units. Should a transfer take place, and if so what are the rational limits on the range of transfer prices? a. no transfer should take place b. a transfer should take place at £50 C. a transfer should take place at £48 d. a transfer should take place between £48 and £50
Teh Teratai Sdn. Bhd. involved in making and distributing its herbal tea product, Hebat inBandar Tengah. Its annual fixed cost is RM162,000, where RM130, 000 is for theadministration and distribution effort involved in selling the products. The sales manager istargeting a total of 35, 000 boxes would be sold per year. The variable cost for processing isRM2 per box and its variables sales expense is 30 percent of the selling price. There will beno administrative cost incurred. The management is targeting a profit of RM160, 000 for thecurrent year. (a) Based on the above information, determine the selling price of one box of Hebat. (b) There are several reasons for cost - based approach of a product to become popular andimportant in pricing decision. Discuss these reasons.
What would be the total contribution to profit to the company as a whole for 10,000 units transferred to Division B and later sold to outside customers at P21 per unit. A. P20,000 B. P40,000 C. (P20,000) D. P80,000
Kk.207.
Bhupatbhai

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