4. Cost and management accounting (A Level)
A section of Accounting, 9706
Listing 10 of 174 questions
T Limited manufactures a single product. The following budgeted information is available. Per unit $ Direct materials 8.40 Direct labour 14.50 Other variable costs 2.30 Fixed costs 8.00 Each unit is sold for $36. Budgeted monthly production and sales are 1200 units. REQUIRED Calculate the monthly break-even point in units. Calculate the margin of safety: in units in revenue Identify three assumptions made when using break-even analysis. Additional information In January 2021 the company made and sold 1120 units. REQUIRED Calculate the contribution to sales ratio. Calculate the profit made in January 2021. Additional information In March 2021 a machine fault meant that only 75% of budgeted output could be produced. The directors considered two options. Option A Reduce normal output by 25%; as a result, materials cost would be affected because trade discount of 20% on bulk orders would not be available. All other costs would remain the same. Buy in units from a competitor at $27.20 per unit. The competitor can supply a maximum of 250 units and will charge $125 for delivering this quantity. Option B Hire a replacement machine at a cost of $1600 for the month. The replacement machine could make an additional 200 units per month. All other costs would remain the same. REQUIRED Calculate the profit for March 2021 for: Option A Option B Advise the directors which option they should choose. Justify your advice by considering both options. Additional information Recently a system of budgetary control has been introduced by T Limited. However, there have been concerns that the system has not worked well. REQUIRED State three limitations of budgetary control.
9706_s21_qp_23
THEORY
2021
Paper 2, Variant 3
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Questions Discovered
174