The following table depicts the budgeted sales volume and per unit costs and profits for an English manufacturer (Toys Ltd.) of two different children’s toys, both of which are produced in the same factory: Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer
The following table depicts the budgeted sales volume and per unit costs and profits for an English manufacturer (Toys Ltd.) of two different children’s toys, both of which are produced in the same factory: Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following table depicts the budgeted sales volume and per unit costs and profits for an English manufacturer (Toys Ltd.) of two different children’s toys, both of which are produced in the same factory:
Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer
Transcribed Image Text:Product
Budgeted sales (units)
2500
3000
Sales price per unit
40
39
Material
12
6.
Labour
12
20
Variable overheads
4
Fixed overhead per unit
10
Total cost per unit
35
40
Profit per unit
-1
5.
5.
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