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2 Question Two New millennium Itd company has determined that Total production cost is primarily a function of Number of units produced in the various
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Question Two New millennium Itd company has determined that Total production cost is primarily a function of Number of units produced in the various production departments. The Production cost incurred and the actual Units produced during the months of January to July 2019 were as follows: Month Number of unit produced Total production cost sh (000) Jan 100 300 Feb 110 350 March 300 650 April 250 510 May 340 800 June 150 400 July 350 850 Required: 1. Determine the cost estimation function using: o i High-low method. (6 marks) o ii Regression analysis (6 marks) 2. Using the regression function estimate: . i The production costs that would have been incurred if the unit produced were expected to be 600 in the month of august 2019. (3mks) 1. The total cost of component Z is as below: Per unit (ksh) Units 20,000 Labour 8 160,000 Direct materials 20,000 variable overheads A 80,000 Fixed overheads applied 100,000i). The original budget. ii). If product SHARIA is deleted. Prepare a statement showing the total contribution and profit for each product group on the basis of; i). The original budget. ii). If product SHARIA is deleted. Using your results from (a) and (b) advise whether product SHARIA should be deleted from the product range, giving reasons for your decision. Question One Abiola Itd produces product T. The projected income statement for the year 2013 is as follows: Sh. Sh. Sales (50,000 units) 3,000,000 Variable cost Direct materials 700,000 Direct labor 400,000 Direct expenses 300,000 Variable overheads 160,000 (1.560.000) Contribution Margin 1,440,000 Less fixed costs 800.000 Net profit 640 000 Required: 1. Break-even point in units and revenue (4 Marks) 2. How many units to be sold to earn a profit of sh. 150,000 (4 marks) For the projected level of sales, compute the margin of safety in units (2 marks)Step by Step Solution
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