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The management of FIXBLE Ltd. attended a seminar whereby the following topic was discussed: Determining how cost will change with output or other measurable factors
The management of FIXBLE Ltd. attended a seminar whereby the following topic was discussed: "Determining how cost will change with output or other measurable factors of activity is of vital importance for decision-making, planning and control and this involves distinguishing between fixed and variable costs at differently activity levels. The sales manager who attended the seminar was shown the following cost volume graphs: (i) (ii) (iii) KEN The production manager who also attended the seminar was provided the following cost data for different levels of activity by the finance department. February March Activity levels (units) 25,000 40,000 RM RM Direct materials 157,500 252,000 Direct wages 225,000 360,000 Production overheads 143,000 188,000 Selling overheads 78,000 111,000 Total costs 603,500 911,000 b) Determine the following costs: (i) Prime cost per unit (2 marks) Variable production overhead per unit (2 marks) (iii) Variable selling overhead per unit (2 marks) (iv) Production cost at activity level of 29,500 units (4 marks) (v) Total cost at activity level of 36,300 units (4 marks)
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