Question 3 A. Prancer Limited sells one product for which data is given below: Selling...
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Question 3 A. Prancer Limited sells one product for which data is given below: Selling price $135 per unit Variable cost $81 per unit Fixed cost per annum $810,000 Required: [3 marks) (i) Calculate the contribution per unit. (ii) Calculate the breakeven point in units per annum. [4 marks] (iii) Calculate the number of units that must be sold if Prancer Limited wishes to earn a minimum profit of $135,000 for the year. [4 marks] B. Prancer Limited has the following total costs for the manufacture of Product P over a period of 4 months. Using the high-low method, answer the following questions. Month May June July August No. of Units Total Costs ($) 18,000 43,400 9,000 31,700 6,000 27,800 12,300 35,990 (1) Calculate the variable cost per unit produced. [3 marks] (ii) Calculate the fixed cost portion of the total cost. [3 marks) (i) If the company produces 21,000 units in September, what will be the total cost? Appendix E Highest Cost - Lowest Cost Highest Activity - Lowest Activity Total Cost = Total Fixed Cost + Total Variable Costs Total Fixed Costs Contribution per unit Total Fixed Costs Contribution Sales Ratio Total Fixed Costs + Target Profit Contribution per unit Total Fixed Costs + Target Profit Contribution Sales Ratio
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