orton Ltd manufactures a single product, which is sold for N$136 per unit. The standard variable costs per unit of the product are: Direct Material 4 kilos at N$7.50 per kilo Direct labour 5 hours at N$11 per hour Production overhead N$2.4 per direct labour hour Sales overhead N$ 5 per unit The company expects to manufacture and sell 8,000 units in total during the forthcoming year (Year 1). The fixed overhead costs for the forthcoming year are: N$
orton Ltd manufactures a single product, which is sold for N$136 per unit. The standard variable costs per unit of the product are: Direct Material 4 kilos at N$7.50 per kilo Direct labour 5 hours at N$11 per hour Production overhead N$2.4 per direct labour hour Sales overhead N$ 5 per unit The company expects to manufacture and sell 8,000 units in total during the forthcoming year (Year 1). The fixed overhead costs for the forthcoming year are: N$
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Norton Ltd manufactures a single product, which is sold for N$136 per unit.
The
| Direct Material | 4 kilos at N$7.50 per kilo |
| Direct labour | 5 hours at N$11 per hour |
| Production |
N$2.4 per direct labour hour |
| Sales overhead | N$ 5 per unit |
The company expects to manufacture and sell 8,000 units in total during the forthcoming year (Year 1).
The fixed overhead costs for the forthcoming year are:
| N$ | |
| Production | 60 000 |
| Administration | 35 000 |
| Sales | 11 000 |
REQUIRED:
a) Calculate for the forthcoming year (Year 1):
i. The break-even point in dollars and units
ii. The margin of safety in dollars and units
iii. The amount of sales in units that would earn the company a profit of $180,000
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