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Question 04: Daisy Farms (Pvt.) Ltd is engaged in the business of producing premium quality cheese....

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Accounting

Question 04: Daisy Farms (Pvt.) Ltd is engagedin the business of producing premium quality cheese. The cheese isavailable in 2 packing sizes:

Packing

Weight

Selling Price

Small

100g

$3

Large

250g

$5

The following information is available for the month ofFebruary 2017:

  • The variable cost of producing every10g of cheese is $0.05.

  • Rent of the dairy farm is $350 per month.

  • Electricity charges are $0.5 per unit. Small packs requires 2units of electricity while large packs needs 3 units of electricpower. Fixed line rent is $250 per month.

  • Fixed costs are allocated to the products on basis of theirsales price.

REQUIRED: Determine the following:

  1. The contribution earned by each pack of cheese.

  2. The no. of large packs to be sold in February to acquirebreakeven.

  3. The $ sales revenue of small packs in February to acquirebreakeven.

  4. The total contribution if 200 small packs & 131 large packsof cheese were sold in February 2017.

Answer & Explanation Solved by verified expert
4.0 Ratings (603 Votes)
CALCULATION OF VARIABLE COST PER PACK RATE PER 10g REQUIRED GRAM PER PACK AMT PER PACK CHEESE MATERIAL SMALL 005 100 050 CHEESE MATERIAL LARGE 005 250 125 RATE PER UNIT REQUIRED UNITS PER PACK AMT PER PACK    See Answer
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