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Crispy Limited produces toasters at its factory in London. It has three toaster ranges - the 'Single', the 'Double', and the 'Wide Double'. The expected
Crispy Limited produces toasters at its factory in London. It has three toaster ranges - the 'Single', the 'Double', and the 'Wide Double'. The expected monthly costs and sales information for each * range is as follows: Single Double Wide Double Sales and production units 2,500 6,000 400 Machine hours per month 1,250 2,400 300 Total sales revenue 90,000 270,000 26,000 Total direct materials 25,000 72,000 8,000 Total direct labour 12,500 48,000 4,800 Total variable overheads 5,000 18,000 1,000 Total fixed costs relating to the proc + n of all toasters are 98,670 per mo You are required to: a) Complete the table below to show for each product range the expected contribution per unit (6 marks). Single Double Wide Double Sales revenue per unit minus: Variable costs per unit Direct materials Direct labour Variable costs per unit Contribution per unit b) If the company only produces the 'Double' range, calculate the number of units it would need to make and sell each month to cover the fixed costs of 98,670 (2 marks) c) The breakdown of a machine used in the production of toaster has reduced available machine time from 3,950 to 2,800 hours. The manager asks you to calculate the contribution of each unit per machine hour (6 marks) d) Using the information from (c), calculate how many units of each of product ranges the company should make and sell in order to maximise its profits using 2,800 machine hours (6 marks) e) List Three limitations of break-even analysis, and to explain any Two of them
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