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Question 04 Cost Volume Profit - (10 Marks) Lloyd Ltd. manufacture plastic tables. The following information show the costs associated with producing these tables: Direct
Question 04 Cost Volume Profit - (10 Marks)
Lloyd Ltd. manufacture plastic tables. The following information show the costs associated with producing these tables:
- Direct Materials - Each table requires 5kg of materials. The materials cost $4 per kg.
- Direct Labour - An employee takes Three hours to complete each table. Employees are paid $7 per hour.
- Machine Time - Each table requires 1.5 hour of machine time. Machine time costs $4 per hour.
- Sales Commission - Sales staff receive $3 commission for every table they sell.
- Fixed Costs $300,000
- Selling Price $75
Required
- Calculate the variable cost per table.
- What is the contribution margin per unit?
- What profit will Lloyd Ltd. make if they sell 20,000 tables?
- If the company aims to make a profit of $500,000, how many tables must be sold?
- How many tables need to be sold to break-even?
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