Q1

Sales price 10
Less: variable costs
DM -4
VE -3
Cont per unit 3

Fixed costs 30000

BEP in units 10000
BEP in revenue (BEP in units x
SP) 100000

4000 units 14000 units

Cont at 12000 42000
Less: FC -30000 -30000
Loss/profit -18000 12000

Margin of safety in units 10000

Margin of safety in pounds 100000

Q2
WH HK FG ME TOTAL
Sales 0 120000 120000 140000 380000
Less: VC 0 -24000 -24000 -28000 -76000
Contribution 0 96000 96000 112000 304000
Less: Salaries and wages -8000 -32000 -34000 -34000 -108000
Less: Fixed costs -30000 -30000 -32000 -34000 -126000
Less: HO FC 0 -27157.89 -27157.89 -31684.21 -86000
Profit -38000 6842.105 2842.105 12315.79 -16000
86000

Q4
SCN 1
SP 10
LESS: VC -5
CONTRIBUTION 5

(I) ABSORPTION COST

VC 5
FIXED COST (90000/40000) 2.25
ABSORPTION COST 7.25

(II) BREAKEVEN POINT

90000/5 18000

(III)
CONT AT 40000 UNITS 200000 (40000 X 5)
LESS: FIXED COSTS -90000
PROFIT 110000
SCN 2
SP 7.5 220000
LESS: VC -5 -90000
LESS: ADD VC -1.5 130000
CONT 1
TOTAL CONT (20000 X 1) 20000

SCN 3
SALES REVENUE (40000 X 10) 400000
LESS: BUYING COST (40000 X 6) -240000
CONTRIBUTION 160000
LESS: FIXED COSTS (90 - 30) -60000
PROFIT 100000
ORGINAL PROFIT 110000
THEREFORE, REJECT THE OFFER

ASSESSMENT 2, TASK 7, PART 1

VARIABLE AND FIXED COST £

Direct material 8
Direct labour (£9 x 20/60) 3
Variable cost 11
Fixed cost (480000/80000) 6
Absorption cost 17

Contribution per unit (22 - 11) 11

BEP in units (480000/11) 43636

Contribution at 80000 units 880000

Less: Fixed costs -480000
Profit 400000