Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CDE Ltd has provided you with the following data relating to the product manufactured by his factory: Selling price per unit $ 100 Variable manufacturing

  1. CDE Ltd has provided you with the following data relating to the product manufactured by his factory:

Selling price per unit

$ 100

Variable manufacturing costs per unit

48

Fixed manufacturing costs per annum

250,000

Variable marketing, distribution and administration costs per unit

16

Fixed non-manufacturing costs per annum

182,000

  1. What is the contribution margin per unit? Show your workings.
  2. Calculate quantity to produce to break even in both units and sales dollars. Show your workings.
  3. CDE Ltd expects to sell 15,000 units in the coming year. What is the margin of safety at this level of activity?
  4. How much profit will the business make for the year if its estimated level of activity of 15,000 units is accurate? Show your workings.
  5. CDE Ltd has spare capacity and receives a special order from an interstate retailer for 1,000 units at a price of $80 per unit. Briefly explain why CDE Ltd should accept or reject the order based on financial analysis.
  6. List two qualitative factors CDE Ltd ought to take into consideration in a special order decision.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Canadian Tax Principles

Authors: Clarence Byrd, Ida Chen

2006-2007 Edition

0132325314, 978-0132325318

More Books

Students also viewed these Accounting questions

Question

How common are dissociative experiences?

Answered: 1 week ago