Question
a) Complete the table below by classifying the cost items. You need to repeat an amount if it belongs to more than one category. You
a) Complete the table below by classifying the cost items. You need to repeat an amount if it belongs to more than one category. You must provide a total for each column. (8 marks)
b) Coffee-Culture Ltd manufactures barista quality coffee machines. The unit selling price is $900 and the variable cost per unit is $630. The monthly fixed cost for August 2020 is $27,000. Answer the questions below in the spaces provided. (Show the formula and workings for each)
Required: Answer the following questions in the spaces provided:
a) Complete the following table by classifying the cost items. You need to repeat an amount if it belongs to more than one category. You must provide a total for each column. (8 marks)
Cost Items | Amount | Prime Costs | Conversion Costs | Product Costs | Period Costs |
Raw materials | 86,800 |
|
|
|
|
Factory supervisors salary | 147,000 |
|
|
|
|
Factory workers wages | 350,000 |
|
|
|
|
Depreciation on office building | 7,280 |
|
|
|
|
Insurance on factory building | 78,400 |
|
|
|
|
Advertising expenses | 168,000 |
|
|
|
|
Totals |
|
|
|
|
|
b) Coffee-Culture Ltd manufactures barista quality coffee machines. The unit selling price is $900 and the variable cost per unit is $630. The monthly fixed cost for August 2020 is $27,000. (Show the formula and workings for each)
1. Calculate the contribution margin per unit. (2 marks)
2. Calculate the contribution margin as a ratio. (2 marks)
3. Calculate the break-even point in units. (2 marks)Calculate the break-even point in sales dollars. (2 marks)
4. Assume that the company sold 120 units of televisions in January 2019. Calculate the margin of safety in dollars. (2 marks)
5. If the target profit for February 2019 is$15,000, calculate the required sales in dollars for February 2019. (2 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started