A factory manufactures two main products. Product X has unit costs of production during a...
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Accounting
A factory manufactures two main products.
Product X has unit costs of production during a trading year as follows:
$
Components 325
Labour 240
Production overheads 85
Distribution expenses 60
All the cost of the components varies directly with the number of units produced. 65% of the labour costs vary directly with the number of units produced. The production overheads do not vary with the number of units produced. 85% of the distribution expenses vary directly with the number of units produced.
(a) Calculate the variable cost per unit and the fixed cost per unit for the trading year
Product Y has fixed costs of $1,200,000 and variable costs per unit of $785 during a trading year. It is sold to wholesalers at $870 per unit.
(b) Calculate
(i) the number of units that must be sold in order to break even
(ii) the level of output required to provide a profit of $500,000
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