Question
Shrewsbury Limited manufactures keep-fit machines. Annual fixed costs are 50384. During a typical year, 2333 machines are produced, with machines paying an average of 411
Shrewsbury Limited manufactures keep-fit machines. Annual fixed costs are 50384. During a typical year, 2333 machines are produced, with machines paying an average of 411 each. The company's variable costs average 147 per machine. Shrewsbury Limited is also considering whether to accept a special order, that would have the following financial effects:
Additional fixed costs per year | 10584 |
Machines ordered | 733 |
Selling price of each machine of this order | 371 |
Variable costs per machine for this order | 157 |
(a) What is the break-even number of machines for the year? (without the special order)?
(b) How much profit or loss is made from the 2333 machines? (without the special order)?
(c) If the number of machines sold rose to 2883 (without the special order), what profit or loss would be made?
(d) What would be the effect on profit or loss if it decided to accept the special order?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started