table deplcts the ageted sales and per an English manufacturer (Toys Ltd.) of two different children's toys, both of which are produced in the same factory: IB BSc SS 2020 Product A B Budgeted sales (units) 2500 3000 £ £ Sales price per unit 40 39 Material 12 Labour 12 20 Variable overheads 5 4 Fixed overhead per unit 10 Total cost per unit 35 40 Profit per unit 5 -1 (a) 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. (b) packaging machine. For a total investment of £10,000, Fixed Overhead Cost can be reduced by £5,000 and the per unit cost of material and labor can both be reduced by 10%, for both Consider Toys Ltd. again. Assume that the production manager is considering a new products. Calculate the impact of such a scheme on total profits. Should they accept or reject this new scheme?

table deplcts the ageted sales and per an English manufacturer (Toys Ltd.) of two different children's toys, both of which are produced in the same factory: IB BSc SS 2020 Product A B Budgeted sales (units) 2500 3000 £ £ Sales price per unit 40 39 Material 12 Labour 12 20 Variable overheads 5 4 Fixed overhead per unit 10 Total cost per unit 35 40 Profit per unit 5 -1 (a) 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. (b) packaging machine. For a total investment of £10,000, Fixed Overhead Cost can be reduced by £5,000 and the per unit cost of material and labor can both be reduced by 10%, for both Consider Toys Ltd. again. Assume that the production manager is considering a new products. Calculate the impact of such a scheme on total profits. Should they accept or reject this new scheme?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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