Question 8 (Wed Week 3) A) The information below shoes the estimated revenue and costs for a company that manufactures 1 product for next month. In addition, the maximum monthly capacity is 60,000 units, however the anticipated output for next month is only 50,000 units. Sales Direct Labour Variable costs Manufacturing Non-variable costs Marketing and Distribution Costs Total Costs Profit Total Cost £ i) 1,600,000 ii) 450,000 400,000 200,000 160,000 1,210,000 A competitor has asked if you would use the temporary excess capacity to manufacture 1000 units for them. They would pay £25 per unit and the extra selling costs would be £3 per unit. 390,000 Requirement Using all the information provided evaluate if you should accept this order. State the assumptions you have made in deciding whether or not to accept the order and discuss how this will impact the business
Question 8 (Wed Week 3) A) The information below shoes the estimated revenue and costs for a company that manufactures 1 product for next month. In addition, the maximum monthly capacity is 60,000 units, however the anticipated output for next month is only 50,000 units. Sales Direct Labour Variable costs Manufacturing Non-variable costs Marketing and Distribution Costs Total Costs Profit Total Cost £ i) 1,600,000 ii) 450,000 400,000 200,000 160,000 1,210,000 A competitor has asked if you would use the temporary excess capacity to manufacture 1000 units for them. They would pay £25 per unit and the extra selling costs would be £3 per unit. 390,000 Requirement Using all the information provided evaluate if you should accept this order. State the assumptions you have made in deciding whether or not to accept the order and discuss how this will impact the business
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 8 (Wed Week 3)
A) The information below shoes the estimated revenue and costs for a company that
manufactures 1 product for next month. In addition, the maximum monthly capacity is
60,000 units, however the anticipated output for next month is only 50,000 units.
Sales
Direct Labour
Variable costs
Manufacturing Non-variable
costs
Marketing and Distribution
Costs
Total Costs
Profit
Requirement
i)
Total Cost £
ii)
1,600,000
450,000
400,000
200,000
160,000
A competitor has asked if you would use the temporary excess capacity to manufacture
1000 units for them. They would pay £25 per unit and the extra selling costs would be £3
per unit.
1,210,000
390,000
Using all the information provided evaluate if you should accept this order.
State the assumptions you have made in deciding whether or not to accept the order
and discuss how this will impact the business
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