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Appendix 3 ABC Production Ltd produces a single product. Its costs and sales for the year ended 31 December were as follows: Units sold 20

Appendix 3 ABC Production Ltd produces a single product. Its costs and sales for the year ended 31 December were as follows: Units sold 20 000 Sales revenue 900 000 Direct wages 200 000 Direct materials 300 000 Variable overheads 120 000 Fixed costs 205 000 The selling price and all costs were at a constant rate throughout the year. To improve profit for the next year, the following changes are planned: (i) Units to be sold to increase by 10%. Selling price to be maintained at the current price. Wages to be increased by 3% per unit. Material costs to be reduced by 5% per unit, this being achieved by changing from a local supplier to an overseas supplier. Variable overheads to be reduced by 0.45 per unit. (v) (vi) Fixed costs to increase by 7 500 per annum

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