Home › Forums › ACCA Forums › ACCA AB Accountant in Business Forums (FIA FAB Forums) › Hi could someone please answer these questions ? Thanks!
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%.
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%
Curtley Ltd manufactures cricket balls. The forecasted income statement for the year, before any special orders, is as follows:
Total Per Unit
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?
A. £100,000 increase
B. £125,000 increase
C. £25,000 decrease
D. £62,500 decrease
E. £112,500 increase
And have you attempted them yourself? What answer did you get? Did you struggle with any particular part?
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