TASK 7

Hi, please see my workings as below. Hopefully it matches the answer you have to the question.

Savings in materials -Reduces by 3% per unit to 17.85 - 55p saving per unit x 25000 = £13,750

Savings direct labour - Current cost is £5.50 per unit x 25000 units = 137,500, will cost 130,625 (5% less). Savings of £6,875.

Savings variable power - Currently costs .30 x 25,000 = £7500 , with savings of 20% reduces to £6000. Savings of £1500.

Increased fixed machine costs - depreciation increases it by £20,000

Profit/loss - Total savings less increased depreciation expense, comes to £2125 savings.

To get the percentage decrease, for example to work out 20% decreased cost, just multiply by the rest of the percentage out of 100, i.e. what will be left, so multiply in your calculator by 0.80 / 80% which is 100 % minus 20%.