the owner of Jack Pty Ltd did some careful forecasting to arrive at the following figures:

Expected selling price (per violin case)$210

Expected costs (per violin case):

Direct labour (4 hours at $15) $60

Direct materials (20 kg at $2.50) $50

Total variable costs per violin case $110

Expected fixed costs (per month)

Manufacturing overhead $20.000

Selling and administration $80.000

Total $100.000

"It looks pretty good" stated by owner. "With a contribution of $100 per case w need only 1,000 cases to break even." Upon completion of the firm's first mont of activities the part-time accountant produced the following statements:

Statement of Actual Manufacturing Costs (1,400 units produced)

Direct labour (6,000 hours	$96.000
Direct materials (30,000 kg)	90.000
Fixed manufacturing overhead	80000
Total Manf costs	266000
cost per case	$190
number of cases produced	1400

Profit Statement - Sale of 900 Cases

Sales (900 cases at $210)	$189.000
Manufacturing costs (900 at $190)	171.000
Gross profit	18000
Selling and administration expense	15000

Sales (900 cases at $210) $189.000 Manufacturing costs (900 at $190) 171.000 Gross profit $18.000 15.000 Selling and administration expense Profit 3,000