70.2K

Verified Solution

Link Copied!

Question 2 (50 marks Marie and Peter Bridge run a business called MPB Ltd which manufactures and sells a standard model of speakers. They sell each set of speakers for 105. Next year the business plans to manufacture and sell 20,000 sets of speakers. The business's costs for next year are forecasted as follows: Manufacturing Variable direct materials 40 per set Variable direct labour 20 per set Other indirect variable costs 15 per set Fixed manufacturing costs 450,000 per year Fixed non-manufacturing costs 30,000 per year Required: a) Calculate: i. The variable cost of a set of speakers. (2 marks) ii. The full cost of a set of speakers. (3 marks) iii. The breakeven point (BEP) for next year and state why the business might find it useful to know its BEP. (3 marks) iv. The margin of safety for next year expressed in units. (2 marks) v. The profit or loss if 19,000 sets of speakers are sold next year. (4 marks) b) A large French company has contacted MPB Ltd asking if MPB will produce 5,000 sets of speakers for a worldwide promotion. Each set has to be engraved with the French company's logo and the carrying case must bear its brand name. The extra work involved in this will cost 5 per set. The French company has offered to pay a total of 450,000 for the order. State, with supporting workings and assumptions

Answer & Explanation Solved by verified expert

See Answer