Question 7 Lime Ltd produces hand-made flavoured cupcakes. If labour is limited to 6,000 hours per week, how many of each flavour should be produced each week to maximise profit? Sales price Variable cost Fixed cost per cake Labour time to make each cake Weekly sales demand (cupcakes) Lemon () 2.00 1.20 0.40 30 minutes 1,000 Toffee () 3.00 2.00 0.20 30 minutes 5,000 Vanilla () 4.00 2.30 0.25 60 minutes 2,000 Chocolate () 3.60 2.20 0.22 60 minutes 6,000 (10 marks) Question 8 Moss Ltd sells laptop computers. Budgeted sales are 50,000 at a selling price of 500 per computer. Total fixed costs per annum are 12,000 and variable costs are 100 per product. Calculate Moss Ltd's: (i) (ii) Break-even point in units and in value (monetary) terms Margin of Safety at the 50,000 budgeted level of sales in units and in value (monetary) terms. (10 marks) Question 9 Emerald Ltd produces two products - the 'Opal' and the 'Ruby'. Total overhead costs for the period are 100,000, made up of 80,000 machine set-up costs and 20,000 inspection costs. Overhead is absorbed on the basis of direct labour hours (DLH). Total DLH for the period are 20,000, three quarters of which are used to produce the 'Opal' and the remainder used to produce the 'Ruby'. The machinery for producing the 'Opal' only needs to be set up once whereas the 'Ruby' requires nine machine set-ups. The 'Opal' and the 'Ruby' both require two inspections each. Calculate the total overhead to be charged to the 'Opal and the 'Ruby' using: (i) Traditional costing Activity-based costing