Question 04 Cost Volume Profit - (10 Marks)

Lloyd Ltd. manufacture plastic tables. The following information show the costs associated with producing these tables:

1. Direct Materials - Each table requires 5kg of materials. The materials cost $4 per kg.
2. Direct Labour - An employee takes Three hours to complete each table. Employees are paid $7 per hour.
3. Machine Time - Each table requires 1.5 hour of machine time. Machine time costs $4 per hour.
4. Sales Commission - Sales staff receive $3 commission for every table they sell.
5. Fixed Costs $300,000
6. Selling Price $75

Required

1. Calculate the variable cost per table.
2. What is the contribution margin per unit?
3. What profit will Lloyd Ltd. make if they sell 20,000 tables?
4. If the company aims to make a profit of $500,000, how many tables must be sold?
5. How many tables need to be sold to break-even?