50.1K

Verified Solution

Link Copied!

The following costs are incurred by Kingsley Beverages, a manufacturer of energy drinks.

Marketing costs incurred to promote a new apple flavoured sports drink

The monthly salary paid to the factory supervisor

The cost of sugar used to manufacture the drinks

The hourly rate paid to maintenance staff for repairs to the drink manufacturing equipment

Required:

For each cost indicate if it is:

a) a product or period cost

b) a variable or fixed cost

c) a direct or indirect manufacturing cost or neither

Part B (8 marks)

A Slice of Italy manufactures and sells homemade baked pasta for $30 per dish. During January 2022 the company sold 1,000 dishes of pasta and incurred variable costs of $18,000 to manufacture the1,000 dishes of pasta.

Required :

a) Calculate the contribution margin ratio for January 2022. Show all your workings. (3 marks)

b) If the break-even sales units per month is 900 units, calculate the total fixed costs for January. Show all of your workings. (2 marks)

c) Calculate the required sales revenue for January 2022, if the businesss target profit for the month is $4,200. Show all your workings. (2 marks)

d) If the businesss variable costs increased by $2 per dish of pasta, and fixed costs and selling price remain the same, explain how the increase in variable costs would impact the break-even point in sales units. (1 mark)

Part C (6 marks)

The following cost data relates to Queenspark Ltd, a manufacturer of T-shirts for the month of April 2022

Cost Items	Amount $
Cost of sewing machine maintenance	4,000
Salary of the finance director	24,000
Cost of fabric used to manufacture the T-shirts	11,500
Rental of office building	9,000
Repairs to delivery vans damaged in flood waters	6,300
Wages of employees who sew the T-shirts	13,000

Required:

Calculate the following costs for January showing all your workings:

a) Product Costs (3 marks)

b) Period Costs (3 marks)

Answer & Explanation Solved by verified expert

See Answer