Home › Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Marginal costing
This topic contains 7 replies, has 2 voices, and was last updated by williams2 2 months, 3 weeks ago.

AuthorPosts

June 27, 2017 at 5:17 am
A company,which uses marginal costing, normally manufactures 1000 units of a product in a period. the product is sold for $50 per units. costs for the 1000 units are:
Direct material $16300
Direct labour $9800
Fixed overheads $21600How much profit will be expected if 1100 units of the product are manufactured and sold in the period?
A) $2300
B) $2530
C) $4690
D) $7300
I need help please…….?June 27, 2017 at 9:54 am
C) $4,690
Selling Price = $50
DM per unit = $16.3 ($16,300/1,000 units)
DL per unit = $9.8 ($9,800/1,000 units)
therefore,
CM per unit = $23.9For 1,100 units,
CM = $23.9 x 1,100 = $26,290
Profit = CMFOH = $26,290$21,600 = $4,690August 27, 2017 at 12:36 pm
CASH BUDGET
Spare makes gross sales of 40,000 per month, of which 10% are for cash, the rest on credit.
Experience shows the following:
receivables
within one month 40%
within two month 50%
settlement discounts (for payment within one month) 4%Total expected cash receipts in any month will be…
(a) 35,824
(b) 36,400
(c) 38,540
(d) 40,000please help…..
August 30, 2017 at 9:30 am
@williams2
I’m not sure why are you asking the full questions from BPP Kit when you already have the answers in there.
We are not here to just provide you answers to whatever question you ask. Its the same as if you’re asking us to do your homework.
Next time, please read the question carefully, try to understand the answer given in the Kit, and ask whatever is in the ANSWER that you don’t understand.For this question, here’s the workings:
Total Sales = 40,000
Cash Sales = 40,000*10% = 4,000
Credit Sales = 36,000
Out of these 36,000 Receivables, 40% are received in the first month and 50% in the second month. There’s a settlement discount of 4% for the receivables paid in first month.First month = 36000*40%*96%(less 4%) = 13,824
2nd month = 36000*50% = 18,000Total Cash Receipts:
Cash Sales = 4,000
1st month receivables = 13,824
2nd month receivables = 18,000
Total = 35,824
Therefore, the answer is A.August 30, 2017 at 3:28 pm
thanks a lot, i was getting trouble understanding how they got 13,824 but now i got it, thanks very much.
August 31, 2017 at 10:00 am
Thanks a lot, i was getting problems for understanding how they got first month 36000*40%*96%(less 4%)= 13824, now i understand and thanks again for your generosity, I really appreciate it.

AuthorPosts
The topic ‘Marginal costing’ is closed to new replies.