2.2. Traditional costing methods
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 533 questions
For Examiner's Use Clarke Limited manufactures one product, the Apex. The following forecast information for the Apex is available for the year ending 31 December 2014: Per unit: Selling price $45.50 Direct material ($4 per metre) $14.00 Direct labour ($12 per hour) $18.00 Variable production overhead $ 3.00 Sales demand 4 000 units Fixed overheads are forecast to be $23 100 for the year. REQUIRED Calculate the breakeven point in units for the sales of the Apex. Calculate the margin of safety for the Apex in terms of revenue. For Examiner's Use Clarke Limited has decided to introduce two new products in addition to the Apex; the Bond and the Cord. Both products use the same direct material and the same grade of direct labour as the Apex. The following forecast information is available for the year ending 31 December 2014: Per unit: Bond Cord Selling price $52.00 $67.50 Direct material ($4 per metre) $16.00 $20.00 Direct labour ($12 per hour) $24.00 $30.00 Variable production overhead $ 4.00 $ 5.00 Sales demand 6 000 units 2 000 units Fixed overheads are expected to double as a result of producing all three products. REQUIRED Calculate the contribution per unit of the Bond and the Cord. Calculate the total quantity of direct material required by Clarke Limited for the year ending 31 December 2014. Clarke Limited has been told that due to a shortage of direct material, only 40 000 metres will be available for the year. Calculate the maximum forecast profit for Clarke Limited for the year ending 31 December 2014 using 40 000 metres of direct material. For Examiner's Use Explain why profit calculated using marginal costing would be different to that calculated using absorption costing.
9706_s13_qp_22
THEORY
2013
Paper 2, Variant 2
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Bould Limited manufactures two products, Wye and Zed. The forecast data for the year ending 30 June 2016 is as follows. Wye Zed $ $ Revenue from Wye – 70 000 units at $12 840 000 Revenue from Zed – 90 000 units at $8 720 000 Materials (259 000) (180 000) Labour (233 000) (372 000) Overheads (190 000) (207 000) Profit / (Loss) 158 000 (39 000) Labour includes fixed costs 65 000 48 000 Overheads include fixed costs 36 000 45 000 REQUIRED Calculate the contribution per unit of Wye. Calculate the contribution per unit of Zed. Calculate the break-even point in units of Zed. Calculate the break-even point in revenue of Zed. Calculate the margin of safety in revenue for Zed. Additional information The directors are concerned about the forecast loss of manufacturing Zed and are considering two proposals. Proposal 1 Increase the selling price of Zed by $1.20 per unit. The sales volume is expected to fall by 5% as a result. Proposal 2 Stop manufacturing Zed. This will incur redundancy costs of $20 000. There would be an increased additional budget facility for advertising Wye, which would increase sales volume of Wye by 40%. REQUIRED Calculate the revised forecast profit of Bould Limited for the year ended 30 June 2016 if proposal 1 is adopted. Calculate the revised forecast profit if proposal 2 is adopted. Advise, with reasons, which proposal the directors should adopt. Proposal Evaluation
9706_s15_qp_21
THEORY
2015
Paper 2, Variant 1
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Questions Discovered
533