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1.
SECTIONS' OVERHEADS
Procurement Production Selling
Total Overheads 5,000.00 40,000.00 15,000.00 Fixed costs 30% 60% 40% Work unit patterns bought machine hours units sold Number of work units 6,000.00 1,500.00 2,700.00 Practical capacity 7,500.00 2,000.00 3,000.00
2.RAW MATERIALS
Units € Total Fabric patterns 6,000.00 150,000.00 Supplier discount 20,000.00
3. PRODUCTION
Shirts produced (units) 2,750.00
Fabric patterns / shirt 2.00 Direct Labour hours / shirt 1.00 Cost per DL hour 10.00
4. SALES
Units Selling price
Shirts sold 2,700.00 120.00 Admin. And General 7,000.00 100% 1. OVERHEADS CLASSIFICATION
Procurement Production Total Overheads 5,000.00 40,000.00 Work unit patterns bought machine hours Number of work units 6,000.00 1,500.00 Cost / work unit 0.83 26.67
2. PATTERNS PURCHASING COST
units € Supplier invoice 6,000.00 150,000.00 Discount - 20,000.00 procurement costs 5,000.00 Total 135,000.00
Shirts RM consumption 123,750.00 DL 27,500.00 1 hour per shirt x 10€/hour = 2750 shirts x 1h Production costs 40,000.00 TOTAL PRODUCTION 191,250.00 Unist produced 2,750.00 Cost / unit 69.55
5. SHIRT STOCK
Shirts units cost/ unit
Op. Stock Production 2,750.00 69.55 Units sold and transfer out cost 2,700.00 69.55 Closing stock 50.00 69.55
6. P&L TOTAL Sales 324,000.00 COGS - 187,772.73 Gross Margin 136,227.27 Selling costs - 15,000.00 Comercial margin 121,227.27 Admin and General - 7,000.00 OPERATIONAL INCOME 114,227.27 Selling Admin. And General 15,000.00 7,000.00 units sold 2,700.00 5.56
Procurement Production Total Overheads 5,000.00 40,000.00 Fixed costs 1,500.00 24,000.00 Activity rate 0.80 0.75 FC to be allocated = FC X activity rate 1,200.00 18,000.00 Variable costs 3,500.00 16,000.00 TOTAL COSTS TO BE ALLOCATED 4,700.00 34,000.00 Work unit patterns bought machine hours Number of work units 6,000.00 1,500.00 Cost / work unit 0.78 22.67 UNDER RECOVERY COST 300.00 6,000.00
2. PATTERNS PURCHASING COST
units € Supplier invoice 6,000.00 150,000.00 Discount - 20,000.00 procurement costs 4,700.00 Total 134,700.00
Shirts RM consumption 123,475.00 DL 27,500.00 Production costs 34,000.00 production cost under absorption costing TOTAL PRODUCTION 184,975.00 Unist produced 2,750.00 Cost / unit 67.26
5. SHIRT STOCK
Shirts units cost/ unit
Op. Stock Production 2,750.00 67.26 Units sold and transfer out cost 2,700.00 67.26 Closing stock 50.00 67.26
6. P&L
TOTAL Sales 324,000.00 COGS - 181,611.82 Gross Margin 142,388.18 Selling costs - 14,400.00 selling cost under absorption costing Comercial margin 127,988.18 Admin and General - 7,000.00 Under recovery costs - 6,900.00 OPERATING INCOME 114,088.18 Selling Admin. And General 15,000.00 7,000.00 6,000.00 7,000.00 0.90 5,400.00 9,000.00 14,400.00 units sold 2,700.00 5.33 600.00
procurement cost under absorption costing
TOTAL
134,700.00 123,475.00 11,225.00
ost under absorption costing
TOTAL 184,975.00 181,611.82 3,363.18
nder absorption costing
VARIABLE
1. OVERHEADS CLASSIFICATION
Procurement Production Total Overheads 5,000.00 40,000.00 Fixed costs 1,500.00 24,000.00 Activity rate FC to be allocated = FC X activity rate Variable costs 3,500.00 16,000.00 TOTAL COSTS TO BE ALLOCATED 3,500.00 16,000.00 Work unit patterns bought machine hours Number of work units 6,000.00 1,500.00 Cost / work unit 0.58 10.67
2. PATTERNS PURCHASING COST
units € Supplier invoice 6,000.00 150,000.00 Discount - 20,000.00 procurement costs 3,500.00 Total 133,500.00
Shirts RM consumption 122,375.00 VARIABLE COST- ALWAYS DL 27,500.00 Variable cost Production costs 16,000.00 Production under variable costing TOTAL PRODUCTION 165,875.00 Unist produced 2,750.00 Cost / unit 60.32 Variable cost per unit
5. SHIRT STOCK Under variable costing
Shirts units cost/ unit
Op. Stock Production 2,750.00 60.32 Units sold and transfer out cost 2,700.00 60.32 Closing stock 50.00 60.32
6. P&L
TOTAL Sales 324,000.00 Cogs under VC - 162,859.09 Industrial margin under VC 161,140.91 Selling costs - 9,000.00 selling cost under variable costing Contribution margin 152,140.91
Total fixed costs - Sum of all the fixed costs >
OPERATING INCOME 152,140.91
BEP units FC/ CM units 683.229813664596
BEP euros FC/ CM % 81984.667802385 explain meaning
Margin of safety on sales 74.69
Explain the meaning % in which sales revenues could decrease without making losses
target income =150000
units to be sold ??? 3345.25410056467 sales revenues ??? 401430.49206776 DOES THE COMPAny have the capacity to produce 3345 units? p4oedution activity rate is 75% so 25% free capacity, the qustion is how many units can be manufactured with the free (id technical efficiency= number of machine hours to produce 1 shirt= actual activity/units produced = 1500 mach hours/2750 so i need 0.55 hours per unit produced free cpacity n machine hours= total practical capacity- actual activity = 2000 mach hours - 1500 mach hours 500 machine hours so unit that should be produced with free capacity= technical efficiency free capacity / technical efficiency 909 shirts manufactured with free capacity 3,659 total number of shirts with 100% production capacity
offer for 500 shirts at SP of 90 euros, with the logo of the buyer printed, which means extra FC of 6000. there wont be any commercila costs should the company accept the offer number of units 500 selling price 90 additional FC 6000 ECONOMIC CRITERIA selling price per unit 90 (negativo) variable cost of manufacturing 1 unit 60.32 contubution margin per unit 29.68 BEP 202.156334231806
2. technical criteria;: DO WE HAVE ENOUGH CAPACITY TO MANUFACTURE 1200 SHIRTS
We only have enough capacity to manufacture 917 shirts so we reject offer or we increase capacity. BEP of the offer= additonal FC/ offer contirbution margin 676.132521974307 the comoany decides not to invest in the new capacity,but prefers to drop off regular customers to serve the oders free capacity allows to manufacture 917 shirts the offer is for 1200 shirts we shoid have to drop off 1200- 917 283 shirts positive pont selling 1200 shirts that bring a CM per unit 29,68 35
the company wants to decrease the selling price by 10%, the volume will increase by 20% the company wil do a marketng Selling Admin. And General 15,000.00 7,000.00 6,000.00 7,000.00
9,000.00 9,000.00 units sold 2,700.00 3.33
procurement cost under absorption costing
TOTAL
133,500.00 122,375.00 11,125.00
able costing
TOTAL 165,875.00 162,859.09 3,015.91
% Per unit 100.00% 120 -50.27% -60.32 49.73% 59.68 -2.78% -3.33 46.96% 56.35
38,500.00
the company should sell 683 firms in order to receive an OP. Inc =0 BEP in unitsx selling price per unit 81960
