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PART A (4 marks) The following costs are incurred by Aline Furniture, a manufacturer of outdoor furniture. Glue used to manufacture the outdoor furniture i.
PART A (4 marks) The following costs are incurred by Aline Furniture, a manufacturer of outdoor furniture. Glue used to manufacture the outdoor furniture i. ii. Insurance cost of the factory building iii. Office administration staff salaries iv. Commissions paid to sales staff Required: For each cost indicate if it is: a) a product or period cost b) a variable or fixed cost PART B (9 marks) Shimano Pty Ltd builds custom made fishing rods for game fishing. Each rod sells for $900 and the variable costs per rod are 60% of the selling price. In 2021 the business incurs fixed costs of $108,000. Required: Calculate the following showing all your workings. a) Contribution margin ratio (3 marks). b) Annual break-even point in sales units (2 marks). c) The margin of safety percentage assuming that expected sales were $360,000 (3 marks). d) Explain how Shimano Ltd's management may interpret your calculation of the margin of safety percentage in (c) above. (1 mark) PART C (7 marks) The Wizpop manufactures sports energy drinks and incurred the following costs for the month of February 2022. Cost Items Amount$ Cost of sugar and flavouring used to manufacture the drinks 28,000 Repairs to delivery trucks damaged in a hailstorm 13,000 Sales commission paid to sales staff 10,100 Depreciation of factory equipment 12,000 Wages of night security guards for the factory building 9,400 Wages of employees working on the manufacturing 16,500 assembly line Administration office rent costs 8,000 Required: Calculate the following costs for February 2022 showing all your workings. a) Prime Costs (2 marks) Manufacturing Overhead (2 marks) b) c) Period Costs (3 marks) 1 ABUI Product/Period Variable/Fixed PART A Cost Item Glue used to manufacture the furniture Insurance of the factory building Administration staff salaries Commissions paid to sales staff PART B a) Contribution margin ratio b) Annual break-even point in sales units III !!! c) The margin of safety percentage assuming that expected sales were $360,000 d) Explain how Shimano Ltd's management may interpret your calculation of the margin of safety percentage in (c) above PART C a) Prime Costs b) Manufacturing Overhead
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