Hi could someone please answer these questions ? Thanks!

Summerseat Garden Centre manufactures wooden garden chairs and has the following details of the cost of each chair.

Material Cost: Wood £12.50
Metal fittings £7.25
Variable overheads per chair £4.50
Labour hours per chair Assembly 2 hours
Finishing 1 hour
Assembly labour costs £7.50 per hour and finishing labour is £6.25 per hour. Demand is expected to be 2,400 chairs per year selling at £70 per chair.
Fixed overheads are expected to be £45,000 and this includes depreciation of £9,000.

What would be the operating profit, breakeven point and margin of safety if actual demand exceeds expected demand by 10% but selling price falls by 10%.
Select one:
A.£23,040 1429 chairs 34%
B.£22,800 1469 chairs 63%
C.£1,200 2571 chairs 3%
D.£13,080 2045 chairs 22.5%
E.£1,800 2057 chairs 7.7%
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Curtley Ltd manufactures cricket balls. The forecasted income statement for the year, before any special orders, is as follows:

Total Per Unit
(£000’s) £
Sales 4,400 11.00
Manufacturing COGS 3,200 8.00
Gross Profit 1,200 3.00
Selling Expenses 300 0.75
Operating Income 900 2.25

Fixed costs included in the above statement are £1,200,000 in manufacturing COGS and £100,000 in selling expenses. A special order for 50,000 cricket balls for £7.50 each has been received from Balls’R Us Sports Shops. Curtley has sufficient capacity to take this order and there will be no additional selling expenses. By how much would operating income be affected if the order was accepted?

Select one:
A. £100,000 increase
B. £125,000 increase
C. £25,000 decrease
D. £62,500 decrease
E. £112,500 increase

Comments

  • budgie1
    budgie1 Registered Posts: 1
    units 2400 2640
    [email protected] 168000 166320
    [email protected] 30000 33000
    [email protected] 17400 19140
    variable [email protected] 10800 11880
    [email protected] 36000 39600
    [email protected] 15000 16500
    cost of sales 109200 120120
    gross profit 58800 46120
    fixes cost 45000 45000
    profit 138000 1200

    63-12.5-7.25-4.5-15-6.25=17.50
    45000/17.5= 2571
    2640-2571/2640=3%
    i think the answer is C

    number of units 400 400
    50
    sales rev 4400 4400
    375
    fixed cost 1200 1200
    variable cost 2000 2225
    gross profit 3200 1350
    non product fixed 100 100
    non product variable 200 225
    profit 900 1025

    1025000 - 900000 =125000
    i think the answer is B

    i hope this helps
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