2. Cost and management accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 903 questions
N Limited manufactures a single product at one of its factories. The company uses marginal costing. REQUIRED State two benefits of using break-even analysis. Define the term ‘fixed costs’. Additional information The following details are available for one month’s production: Fixed costs $70 000 Break-even point 8 000 units Selling price per unit $20 Margin of safety $80 000 REQUIRED Calculate the variable cost per unit. Additional information The directors have decided to increase output by 20%. All the output can be sold. New machinery will be purchased at a cost of $72 000. The new machinery will have a useful life of 5 years. The directors also plan the following: Variable costs will remain unchanged. Selling prices will be reduced by 5% to ensure that all production can be sold. The cost of the new machinery will be financed by the issue of 10% debentures. REQUIRED Calculate the monthly revenue based on this plan. Prepare a budgeted marginal costing statement for one month based on this plan for total production. Additional information At another factory the company manufactures two products: X and Y. Both products use the same material. The following information is available for one month’s output. X Y $ $ Selling price per unit Direct material per unit Direct labour per unit Output 5000 units 4000 units This factory’s fixed costs are $58 000 per month. In April 2022 the supplier of direct materials informed the company that it would only be able to supply 75% of the normal monthly requirement in June 2022. REQUIRED Prepare a budgeted production plan for June 2022 to show the maximum profit available. Additional information A director has suggested an alternative plan that the factory should produce extra units in May 2022 to make up for the shortfall of either Product X or Product Y in June 2022. Any additional production will require overtime to be worked. The following information is available: All material requirements can be met in May 2022 but the material has to be converted into finished product immediately as purchased. Overtime is paid at 1.5 times the normal rate. The extra units will be stored at a cost of $4000. REQUIRED Calculate the profit or loss to be made on the extra units if this plan is implemented in May 2022. Advise the directors whether they should use the original budgeted production plan in or whether they should increase production in May 2022 as suggested by the director in his alternative plan. Justify your advice.
9706_s22_qp_21
THEORY
2022
Paper 2, Variant 1
View
Questions Discovered
903