how to solve part c to get the variable cost per unit or the total variable costing ?
for Costing-Marginal studyclix.ie 8. Marginal Costing Ivor Ltd produces a single product. The company during which 90,000 units were produced and a profit and los account for the year ended 31/12/2010 sold, was as follows as a Sales (90,000 units) Materials Direct labour 1.170,000 x 54 56 S 390,000 236,000 Factory overheads Selling expenses Administration expenses Net profit (943.000) 105,000 130,000 The materials, direct labor and 40% sales commission of 5% on sales onalso the factory overheads are variable costs. Apart from es, selling and administration expenses are fixed factory admini You are required to calculate: (a) The company's break-even point and margin of safety must be sold in 2011 if the company is to increase its net profit by price and 20% over the 2010 figure, assuming unchanged g the selling price and cost levels and percentages remain costs by e15c00mpany would make in 2011 if it reduced is selling price to Ell, increased fixed ts by 15,000 and (c) The profit the and thereby increased the number of units sold to 110,000, with all other cost levels and percentages remaining unchanged. (d) The selling the volume of sales and profit remains price the company must charge per unit in 2011, if fixed costs increase by 12% but the same. ind The number of units that must be sold at 16 per unit to provide a profit of i0% of the sales revenue received from these same units. (e) (e) The numhe List and explain two limitations/assumptions of marginal costing (0 (ii) Explain what is meant by a step fixed cost. Roughly sketch a graph of step fixed costs using the following rental payments: 65 0012,000 28,000 50,000 19,000 Rent Output (units) 20,000 30,000 40,000 (80 marks) Question 8 70,000 13.00 Sales (90000 anits) Less Variable Cuts 390,000 Direct wages Factory overhed (40%) Sales commission (5% of sales) 2.800 5.03 452,700 Less Fised CostS 49.200 E1) 46,5006 130.00022.000 Selling expenses (exel Commission) Administration expenses Net Profi 4871 units Break even point (a) 5.03 tu -CPU Margin of safety Budgcted SalesBreak even point 90,000 2145,129 units 44,871 Number of Units to increase profits by 20% (b) Net profit 2010 increase in net profit 20% Net profit for 2011 227,000 +45.400 12199,026 units CPU (c) Profit if selling price dropped to el1 in 2011 1,210,000 [4 (865,700) [4 344,300 Sales (110,000 x 611) Less Variable costs (110,000 87) Total Contribution (110,000 3.13) Less Fixed costs Profit IEe 21 103,60 240.200 41225 d) The selling price to be charged Let S be the selling price Sales - Variable costs - Fixed costs 252,784 479,784 479,784 658.800 1,138,584 13.3167 Profit 227,000 90,000sE-90,00032 + 0.05S)= 90,000s-(658,800 +4.5005] = 0,000S-4,500S 85,500S S P +
