18.4A Dillinger Thompson Limited produces a line of leather bags. Although they vary slightly in design the

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18.4A Dillinger Thompson Limited produces a line of leather bags. Although they vary slightly in design the cost structure is the same for each bag. The company's budget for January 20X5 is as follows:

£

Sales: 4 000 units x £22.00 88 000 Costs Direct materials: 4 000 x (1 square metre x £6.50) (26 000)

Direct labour: 4 000 x (0.5 hours x £7.80) (15 600)

Production overhead (24 000)

22 400 Selling and administrative overhead (6 000)

Net profit 16 400

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