Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fitzgerald Limited produces and sells a single product. Budgeted results for that product, for the year ended 31 December 2012, are shown below: Budgeted sales

Fitzgerald Limited produces and sells a single product. Budgeted results for that product, for the year ended 31 December 2012, are shown below:

Budgeted sales 10,000 units

Sales

2,000,000

Direct Materials

800,000

Direct Labour

400,000

Fixed Overheads

500,000

Total costs

1,700,000

Total Profit

300,000

a) Produce a profit statement for the year ending 31 December 2012, assuming actual sales are 12,000 units.

b) Calculate the break-even point for the year ending 31 December 2012 and the margin of safety expressed as a percentage of the original budgeted sales.

c) Calculate the revised breakeven point if a new wage settlement increases direct labour costs by 20%.

d) Assuming sales of 10,000 units are achieved, and the new wage settlement is never agreed, calculate the selling price per unit that would earn a total profit of 500,000.

e) Discuss the limitations of breakeven analysis.

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

Accounting Multicolumn Journal

Authors: Claudia Gilbertson

11th Edition

1337565423, 9781337565424

More Books

Students also viewed these Accounting questions

Question

8. What are the costs of collecting the information?

Answered: 1 week ago