Alex Confectioners runs a bakery. It bakes at least 50 units at a time. A customer placed
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Question:
Alex Confectioners runs a bakery. It bakes at least 50 units at a time.
A customer placed an order for 600 cakes. Following cost would be incurred for a batch:
Direct materials - INR 5,000
Direct wages - INR 500 (irrespective of units)
Oven set- up cost - INR 750 (irrespective of units)
The bakery absorbs production overheads at a rate of 20% of direct wages cost. 10% is added to the total production cost of each batch to allow for selling, distribution and administration overheads. AC requires a profit margin of 25% of sales value.
Required:
- DETERMINE the price to be charged for 600 cakes.
- CALCULATE cost and selling price per cake.
- DETERMINE what would be selling price per unit If the order is for 605 cakes
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