a) A company manufactures a single product which has variable cost of £40 per unit. The contribution to sales ratio is 45%. Monthly fixed costs are £198,000. Required: What is the breakeven point in pounds and in units? (b) John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units. Required: What is the breakeven point and margin of safety? (c) TLF Ltd wishes to sell 28,000 units of its product, which has a variable cost of £30 to make and sell. Fixed costs are £94,000 and required profit is £26,000. Required Calculate the sales price per unit
(a) A company manufactures a single product which has variable cost of £40
per unit. The contribution to sales ratio is 45%. Monthly fixed costs are
£198,000.
Required:
What is the breakeven point in pounds and in units?
(b) John makes and sells a product which has a variable cost of £60 and
sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted
sales are 16000 units.
Required:
What is the breakeven point and margin of safety?
(c) TLF Ltd wishes to sell 28,000 units of its product, which has a variable
cost of £30 to make and sell. Fixed costs are £94,000 and required profit
is £26,000.
Required
Calculate the sales price per unit
(d) Apple Ltd makes and sells a single product, for which variable costs are
follows:
Direct materials £20
Direct labour £16
Variable production
£48
The sales price is £60 per unit, and fixed costs per annum are £136,000. The
company wishes to make a profit of £32,000 per annum.
Required:
Determine the sales required to achieve this profit
(e) Product Blue Product Red
£ £
Selling £12.00 £24.00
Variable cost £ 4.00 £ 8.00
Contribution margin £ 8.00 £16.00
Fixed costs apportioned £200,000 £400,000
Budgeted Sales Units 140,000 60,000
Required:
Calculate the breakeven points, for each product and the company as a whole
and comment on your findings
(f) Discuss the merits and demerits of the cost volume profit analysis (CVP)
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