50.1K

Verified Solution

Link Copied!

(a) A business has semi-variable overhead costs associated with its manufacturing output. It wants to be able to better plan and control its production, and therefore needs determine which of these costs are fixed and which are variable.

Required: Using the information below, use the high-low method to calculate the monthly fixed cost element of the overhead costs. (The fixed costs are the same each month).

Month Units Overhead costs 1 1,520 42,260 2 2,800 56,800 3 1,750 44,750 4 1,600 41,960 5 2,350 55,040 6 1,300 41,600 7 2,100 50,100 8 2,770 56,000 (4 marks)

(b) Guido is a manufacturing company producing several products for a mainly overseas market. The following data relates to a new product called the Halt 9 to be launched on 1 October 2023. Selling price 22 per unit Forecast sales volume 120,000 units Variable costs 17 per unit Fixed costs 400,000

Required: Using the information above, calculate the minimum sales revenue (s) needed to meet a target profit of 100,000 (4 marks)

(c) SmartSuit is a sole trader business that produces budget suits. Recently it has received a special order. The order requires a particular type of cloth that is not regularly used by the business. The business has 900 metres of this cloth in inventory. This was left over from a previous job and purchased originally at 4 per metre. This inventory of cloth could be sold for 2.80 per metre. The special order requires 1,680 metres of this cloth and the current market price is 6 per metre.

Required: Calculate the relevant cost of the cloth to be used in completing the special order. (4 marks)

Question 4

(d) Gulugu is a business that manufactures exclusive belts. The standard selling price is 15 and the standard variable cost is 6. The budgeted fixed cost for the accounting period is 23,000. The actual sales were 10% more than the budgeted amount of 8,600 units. The only other difference between the budget and the actual accounting figures was that the actual variable cost per unit fell by 15% from the standard one.

Required: Calculate the actual profit made in the accounting period.

Answer & Explanation Solved by verified expert

See Answer