Coffee works Limited manufactures coffee machines for domestic use. The management of the company is considering next year’s production and has asked you to help with certain financial decisions. The following information is available: Selling price (per machine) £80 Direct materials (per machine) £25 Direct labour (per machine) £20 Fixed production overheads £270,000 per year. The company is planning to manufacture 15,000 coffee machines next year. (a) calculate the marginal cost per coffee machine (b) calculate the absorption cost per coffee machine (c) prepare a statement of profit or loss (under marginal and absorption costing method) to show the profit or loss if 15,000 coffee machines are sold
Question 2
Coffee works Limited manufactures coffee machines for domestic use. The management of the company is considering next year’s production and has asked you to help with certain financial decisions. The following information is available:
Selling price (per machine) £80
Direct materials (per machine) £25
Direct labour (per machine) £20
Fixed production
The company is planning to manufacture 15,000 coffee machines next year.
(a) calculate the marginal cost per coffee machine
(b) calculate the absorption cost per coffee machine
(c) prepare a statement of profit or loss (under marginal and absorption costing method) to show the profit or loss if 15,000 coffee machines are sold
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