Upton Ltd is a manufacturing company that plans to make 300 chairs and 100 tables with the following estimated costs: Chairs Tables £ £ Direct labour 12,000 10,000 Direct materials 22,500 16,000 Fixed overheads 75,000 75,000

Upton Ltd is a manufacturing company that plans to make 300 chairs and 100 tables with the following estimated costs: Chairs Tables £ £ Direct labour 12,000 10,000 Direct materials 22,500 16,000 Fixed overheads 75,000 75,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 8MC: What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials,...

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Question

A). If the price is dropped to £400 for chairs and increased to £800 for tables, and all other costs remain

the same:

i). Calculate margin of safety in units & % for the two products.

ii). Comment on the margin of safety & the riskiness of the two products.

B). Identify and discuss THREE assumptions that are underlying break-even analysis.

Upton Ltd is a manufacturing company that plans to make 300 chairs and 100 tables with the following
estimated costs:
Chairs
Tables
£
£
Direct labour
12,000
10,000
Direct materials
22,500
16,000
Fixed overheads
75,000
75,000

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