MDCL assessment 2 task 9 c

Lulu21

Does anyone know how to calculate the last two items in box c. Expected variable manufacturing cost per unit and target fixed cost per unit please ? I’ve got the total target cost of £12.75 but just have a mental block on the how it’s split between the two costs !

ncraggs

In task 9, the variable cost is taken right from the top. You have variable costs of £140,000 for 20,000 units, so this is £7 per unit.

So if you need profit of 25% or £4.25. You have £12.75 to spend on costs. If £7 are variable the rest must be what you have per unit for fixed costs.

So if you have £5.75 per unit for fixed costs, and you have fixed costs of £145,000. You need to sell £145,000/£5.75 = 25217 units.

Lulu21

You’re a star ! Thank you

Mannaesi

Where dd you get this 145 000 0f fixed cost....can you remind me there@ncraggs

Mannaesi

@ncraggs where did you get the 145 000 of fixed cost,,,can you remind me there bro

CornishPixie

Hi Mannaesi

The fixed costs are the remaining costs (R&D £65,000, fixed costs £45,000 and end of life £35,000 = £145,000.

Hope that helps.

Clare