• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Pixie Pharmaceuticals Q126-130 BPP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Pixie Pharmaceuticals Q126-130 BPP

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 18, 2018 at 7:33 pm #448047
    shahmir101
    Member
    • Topics: 14
    • Replies: 4
    • ☆

    Pixie Pharmaceuticals is a research-based company which manufactures a variety of drugs. The purchasing manager has recently been approached by three new manufacturers to produce 3 different drugs, the following cost and price info. is provided:
    Drugs:

    Fairyoxide:

    # of units: 20,000
    Direct material cost per unit: $0.8
    Direct labor cost per unit: $1.6
    Direct expense cost per unit: $0.4
    Fixed cost per unit: $0.8
    Selling price per unit : $4.00
    Imported price per unit : $2.75

    Spriteolite:

    # of units: 40,000
    Direct material cost per unit: $1.00
    Direct labor cost per unit: $1.80
    Direct expense cost per unit: $0.6
    Fixed cost per unit: $1.0
    Selling price per unit : $5.00
    Imported price per unit : $4.20

    Goblinex:

    # of units: 80,000
    Direct material cost per unit: $0.4
    Direct labor cost per unit: $0.8
    Direct expense cost per unit: $0.2
    Fixed cost per unit: $0.4
    Selling price per unit : $2.00
    Imported price per unit : $2.00

    Q127 What saving/(increased cost) per unit would be made/(incurred) if Fairyoxide was purchased from the overseas producer?
    A $0.85
    B $0.05
    C $0.45
    D ($0.05)

    My work/answer
    (0.8+1.6+0.4+0.8) – 2.75 = $0.85
    A

    The right answer B
    (0.8+1.6+0.4) – 2.75 = $0.05

    Why weren’t the fixed costs included in the calculation (there is no mention of contribution cost)?
    Also just wondering in the future if I have a question from the revision kit do you have a copy of the BPP revision kit so instead of typing the whole question I just mention the question#?

    Thank you!!

    April 19, 2018 at 7:01 am #448093
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    I do have the Revision Kit, so please do not type our full questions (it is breach of copyright as well to type out BPP questions 🙂 )

    Unless told otherwise, the total fixed overheads of the business will remain the same whether or not they produce Fairyoxide themselves. How they choose to absorb the overheads between the various products is irrelevant – the total will stay the same regardless.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • Fangzi on The cost of capital (part 1) – ACCA (AFM) lectures
  • Coffeeice6 on What is Assurance? – ACCA Audit and Assurance (AA)
  • khalid.zaheer on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • Nashra30 on CIMA E1 Chapter 3 Test
  • azubair on Financial Performance Measurement – ACCA Performance Management (PM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in