David Ltd manufactures and sells a single product. The standard selling price per unit is $120. The variable cost per unit details are as follows Direct material: $45 Direct labour: $35 Variable overheads: $15 The company budgeted fixed overhead costs of $30 000. They budgeted to produce and sell 3000 units. Required (a) Calculate; (i) The cost and profit per unit (ii) The profit in total for the period (b) Calculate (i) Breakeven point in units and value (sales) (ii) Margin of safety in units and value (sales) (iii) Sales required to achieve a profit of $70 000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
David Ltd manufactures and sells a single product. The standard selling price per unit is $120. The variable cost per unit details are as follows
Direct material: $45
Direct labour: $35
Variable
The company budgeted fixed overhead costs of $30 000. They budgeted to produce and sell 3000 units.
Required
(a) Calculate;
(i) The cost and profit per unit
(ii) The profit in total for the period
(b) Calculate
(i) Breakeven point in units and value (sales)
(ii) Margin of safety in units and value (sales)
(iii) Sales required to achieve a profit of $70 000
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