QUESTION 2 Mulenga Chisha (MC) produces crocodile sausages and the budgeted profit per unit is as follows: K Materials 1.00 Labour 1.50 Variable Production overhead 1.50 Fixed Production overhead 2.00 Variable Selling Cost 0.50 Fixed Selling Cost 1.00 Profit Selling price 2.50 10.00 MC has budgeted 9,500 units of crocodile sausage in a year. In the first year of production, the only difference from the budget was that MC produced 10,500 units of crocodile sausages and sold 8,500 units. Required: Prepare a) Profit statement under absorption costing. b) Profit statement under marginal costing.

QUESTION 2 Mulenga Chisha (MC) produces crocodile sausages and the budgeted profit per unit is as follows: K Materials 1.00 Labour 1.50 Variable Production overhead 1.50 Fixed Production overhead 2.00 Variable Selling Cost 0.50 Fixed Selling Cost 1.00 Profit Selling price 2.50 10.00 MC has budgeted 9,500 units of crocodile sausage in a year. In the first year of production, the only difference from the budget was that MC produced 10,500 units of crocodile sausages and sold 8,500 units. Required: Prepare a) Profit statement under absorption costing. b) Profit statement under marginal costing.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 26BEB: Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes...

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question A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00 Variable Production cost per unit R8.60 Fixed production costs R650 000 Fixed selling and distribution costs R230 400 Sales commission 5% of the selling price Sales 90 000 units Required he marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales commission is increased to 8% percent of selling price and a further R10 000 is spent on advertising Calculate the revised breakeven point based on the marketing managers suggestion
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Question 2: Kevin Co.’s projected contribution-format income statement for the upcoming month is shown below: Sales (500 units) $10,000 Variable expenses 4,000 Contribution margin 6,000 Fixed expenses 1,000 Net operating income $5,000 Required: Compute the breakeven point in units. 2Compute the breakeven point in dollars. 3. If the company wishes to earn a monthly target profit of $10,000, how many units must be sold each month? 4. Compute the company’s margin of safety. State your answer in both dollar and percentage terms. 5. The company’s manager thinks that adding a salaried sales staff member at a cost of $2,000 per month will increase sales by $4,000 per month. If he is correct, what will be the net dollar advantage or disadvantage of making this change? 6. Refer to the original data, the company’s manager believes that a new production process will improve profitability. He plans to add new machinery that will cut…