Question 1:

The three major inputs into the manufacturing process are direct materials, direct labour and manufacturing overheads. If the costs of any of these are not controlled, they may inflate the cost of manufacturing. If the selling price of the final output is determined by the market for the product and cannot be increased, the profit margin will be reduced. Required: 1. Discuss three ways in which a business can ensure that direct material costs could be controlled?

2. Discuss three ways in which direct labour costs can be controlled?

3. Discuss four ways in which a business can ensure that overhead costs could be controlled?

Question 2:

Luciano's Limited has prepared the following draft profit analysis for the current year.