Good dayPlease can you kindly assist with the homework activity, as I do not understand, your assistance will be highly appreciated.Thank youPage 1 is the information and page 2 is the questions
Selling Price 245 Direct Labour (2 hours) (40) (60) 2. Compute the estimated product cost per unit for the new table. (25) Direct Material Variable Overhead (25) 120 3. Calculate the margin of safety and comment on this ratio. (9) An estimate of the annual overheads in respect of production of the new table is presented below: R The initial market response has been positive and management is also considering the Supervisor's salary 160 000 manufacture of a high quality camping chair. The chair has the following cost structure: Electricity 75 000 R Depreciation 250 000 Selling Price 480 Quality Control 150 000 Direct Labour (80) Rent, rates and taxes 75 000 Direct Material (120 Indirect materials 75 000 Variable Overhead (50) 785 000 230 The entity will consist of two manufacturing departments (assembly and painting) and a For fixed overhead allocation purposes, the chair is expected to spend an hour in each maintenance department. For fixed overhead allocation purposes, the table will spend production department during the manufacturing process. The initial demand for the an hour in each of the manufacturing departments. The production manager has chair is expected to be approximately 4 000 units per annum. Although the chairs can provided you with the following planned activity for each of the departments: Maintenance be manufactured without any increase in fixed overheads, direct labour is limited to Assembly Painting 30 000 hours due to the unavailability of skilled labour. The variable selling cost per unit % of indirect materials 40 55 5 is at R25. The owner has requested that 500 chairs also be kept as closing stock at used Book value of machinery R500 000 R500 000 R250 000 year-end. 4. Calculate the product mix that will maximise profits. (14 ) Megawatt hours 2 000 1 000 500 Employees 10 8 2 Floor area occupied (m2) 1 000 800 400 5. Based on the profit maximising product mix calculated in 4 above, prepare a Maintenance hours 200 450 budgeted income statement using variable costing principles. (14) Number of inspections 400 200 Machine Hours 4 000 7 500 Labour hours 10 000 6 000 6. Based on the profit maximising output calculated in 4 above, prepare a budgeted income statement using absorption costing principles. (12) The demand for the table is expected to be 10 000 units in the first year and the owner has requested that the closing stock for the year be 500 units. In addition to the above, manufacturing overheads, the expected sales and marketing costs are R500 000 per 7. Reconcile and explain the differences between the variable and absorption annum (of which 50% are fixed). At a recent strategy session, the owner remained costing profits calculated above. (10) committed to commence the venture. However, he voiced concern about the recent labour problems that several business sectors have been experiencing. He advised that he is considering focusing on the design and marketing of camping equipment and 8. Draft a memorandum to the investor discussing the five qualitative aspects that outsourcing all manufacturing to a local sports equipment manufacturer. must be considered before a decision can be made on outsourcing production. (10) YOU ARE REQUIRED TO: 1. Advise management on the treatment of the survey costs from a tax, accounting and decision-making perspective. (6 marks)
