Intermediate M pic makes two products - Ml and M2 - budgeted details of which-are as follows:

Budgeted production and sales for the year ended 31 December are:

The fixed overhead shown above comprises both general and specific fixed overhead costs. The general fixed overhead cost has been attributed to units of Ml and M2 on the basis of direct labour cost.
The specific fixed cost totals £2500 per annum and relates to product M2 only.
(a)Both products are available from an external supplier. If M pic could purchase only one of them, the maximum price which should be paid per unit of Ml or M2 instead of internal manufacture would be:

(b)If only product Ml were to be made, the number of units to be sold to achieve a profit of £50000 per annum (to the nearest unit) would be A 4074;
B 4537;
C 13333;
D 13 796;
E none of the above.

Transcribed Image Text:

MI M2 () () Selling price 10.00 8.00 Costs per unit: Direct materials 2.50 3.00