14.18 Vernon Limited is a xylophone manufacturer. The direct materials cost of a xylophone is

£300; the direct labour process is intensive and costs £450 per xylophone. Both direct materials and direct labour are fully variable. Each xylophone sells for £1500. In August 2012 the company expects to sell 120 xylophones, and it has budgeted for fixed overheads of £54 000.

What is the company’s budgeted contribution for August 2012?

What is the company’s budgeted net profit for August 2012?