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I have a problem in this question.
My Friend ask me to solve this but i can’t solve.
Q. A company makes and sells a single product.
Variable cost per unit is $8. Fixed production overheads are absorbed over normal activity level of 40,000 units and have been calculated to be $3 per unit.
Selling price per unit is $15.
How much profit is made if company sells 45,000 units?
Can you Help me please?
Why on earth are you solving problems for your friend? Assuming that you are preparing for the Paper MA exam then you should be using a Revision Kit from one of the ACCA Approved Publishers – it has answers and explanations. (And so should your friend if he or she is preparing for the ACCA Paper MA exam!)
To solve this question you multiply 45,000 by the contribution per unit of $7 per unit. That gives you the total contribution and then to get the profit you subtract the fixed overheads of 40,000 x $3 = $120,000.
Have you not watched all of my free lectures?