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Hi Sir please help me with the following questions:
1.
B Co. makes a product which has a variable production cost of $21 per unit and a sales price of $39 per unit. At the beginning of 2005, there was no opening inventory and sales during the year were 50,000 units. fixed costs totalled $328000. Production was 70000 units.What was the contribution per unit?
2.
D Co. makes hats. the company expected to produce 25000 hats during the year which would cost $125000 in Fixed Costs. The total Cost of each hat is $30 (including Fixed cost) and the company can sell them for $40 each. Sales during the year were 15000 hats for a production volume of 20000. Actual fixed cost were $80000 and there was no opening inventory.What is the marginal costing net profit for the year?
1. Contribution is sales less variable costs, so the contribution per unit is 39 – 21 = $18
2. The fixed cost per unit is 125000/25000 = $5. So the variable cost per unit is 30 – 5 = $25.
So the contribution per unit is 40 – 25 = $15.
The total contribution for the year is 15,000 (sales) x $15 = $225,000.
So the profit is 225,000 – 80,000 (actual fixed cost) = $145,000
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