A company produces two domestic appliances, the Starfrig and Starfreezer. The following details have been estimated:

Total costs are estimated to be:

Each Starfreezer requires the same material as a Starfrig but twice as much labour.
Variable overheads are absorbed on direct labour. The demand for the Starfrig has been falling and a new model, the Starfrig II is to be introduced for 19-2 incorporating a freezer compartment which will sell at £115 each.
The estimated costs of the new model are (per unit) Direct Labour £46. Variable overheads £23 and Direct Materials £25. Because of the new model fixed overheads will increase by £200,000. Sales for 19-2 are forecasted to be: Starfreezer 80,000 units Starfrig 32,000 units Starfrig II 15,000 units.
You are required to prepare budgeted profit statements for 19-1 and 19-2 showing the contribution from each model.

Transcribed Image Text:

Sales Year 19-1 Starfrig 40,000 @ 75 each Starfreezer 80,000 @ 90 each