- This topic has 3 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
E Co makes two products, X and Y. Details as follows:
X/Y
Selling Price: 24.00 / 19.20
Direct Materials: 8.40 / 9.60
Direct Labour: 3.60 / 2.40
Var Overhead: 1.44 / 0.96
Fix Overhead 2.88/ 2.40
Profit p/u 7.68/ 3.84Budgeted Production: X – 10,000, Y- 12,500
The fixed o/h in X relate to an apportionment of general o/h costs only. However, Y includes specific o/h totalling 6,000.
If only product X were to be made, how many units would need to be sold in order to acheive a profit of 144,000?
Can you please provide a breakdown for this? Thanks.
You need to watch the free lecture on CVP analysis.
The budgeted fixed overheads are (10000 x 2.88) + (12500 x 2.4) = 58,800
If they stop making Y, then the fixed overheads will fall to 58,800 – 6,000 = 52,800.To make a profit of 144,000 they need a contribution of 52,800 + 144,000 = $196,800
The contribution per unit from X = $10.56
Therefore they need to sell 196,800/10.56 = 18,636 units of X.
- You must be logged in to reply to this topic.