Answer ALL FOUR Questions

Question 1

Hull sandwich Ltd makes sandwiches and the company produces this sandwich in batches of 30 packs. The production and sales data for the last two years are given below:

	Year ended 31st October 2019	Year ended 31st October 2018
Production	32,500 batches	31,000 batches
Sales	32,000 batches	30,000 batches

There was no opening inventory on 1^st November 2017. The company ensured variable cost is 30% of sales in both 2018 and 2019, and the variable costs of making one batch of sandwiches before 31^st October 2018 were as follows:

Categories	Cost per batch ()
Direct materials	60
Direct labour	6
Machine hour	15
Variable manufacturing overhead	4
Variable marketing and administrative overhead	7

The fixed manufacturing and marketing and administrative overheads were 600,000 and 500,000 respectively in 2018.

From 1st November 2018, the company has made the following changes to its cost structure:

1. The direct labour, variable manufacturing overhead and variable marketing and administrative overhead costs are to increase by 2%. Besides, a new supply chain reduces the cost of direct materials by 15%.
2. Full-time staff will be paid 3% higher based on the amount in 2018. One-third of the fixed manufacturing cost and one-fifth of the fixed marketing and administrative cost in 2018 represented the salary of full-time staff. No other changes have been made of full-time staff salary.
3. The company has rented a new van for 12,000 per year.
4. The company has recruited a new production manager to supervise the production process. The firm pays salary of 15,000 per year.