Question 4 (30 marks) a. Wellingborough Ltd is proposing to reduce the selling price of...
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Question 4 (30 marks) a. Wellingborough Ltd is proposing to reduce the selling price of its product from 60 per unit to 50 per unit. Fixed costs are 900,000 per annum and variable costs are 30 per unit. At the current price, 50,000 units per annum are made and sold. i What is the breakeven in volume and sales figure for the year at the current selling price? State whether the company has high or low operating gearing at the current volume? Give your reasons. (6 Marks) How many additional units must be sold per annum to make up (8 marks) for the price reduction? (Show your workings) b. State any five limitations of the marginal costing technique. (5 marks) c. List any four bases used in the allocation of production overheads (4 marks) d. For a particular business activity, labour is a variable cost (staff are paid by the unit of output). What factors could cause the (variable) (7 Marks) labour cost not to be constant per unit of output
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