QUESTION 4 CVP Analysis Guide to marks: 20 marks – 4 for a, 4 for b,...

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Accounting

QUESTION 4 CVP Analysis
Guide to marks: 20 marks – 4 for a, 4 for b, 4 for c, 8 ford
Show all calculations to support your answers.
A manufacturer can make two products, A and B. The followingdata are available:B
Product A B Total
Sales price per unit $12 $15
Variable cost per unit $8 $10
Total fixed costs/month $5000
(a)Calculate the unit contribution margin for eachproduct.
(b)This month the manufacturer will specialise in making onlyProduct B. How many does he need to sell to break even?
(c)If they specialise in making only A what is the breakeven salesvolume for the month in sales dollars?
(d)He now decides to manufacture both A and B this month in theratio of 3 of A to 1 of B.
(i)How many of each product must be sold to earn a profit of $3,500before tax for the month?
(ii)How many of each product must be sold to earn a profit of$8,400 after tax (of 30c in the dollar) for the month?

Product	A	B	Total
Sales price per unit	$12	$15
Variable cost per unit	$8	$10
Total fixed costs/month			$5000

Answer & Explanation Solved by verified expert

4.4 Ratings (789 Votes)

a Unit Contribution for each product Unit contribution margin Sales Price per unit Variable Cost per unit Product A 12 8 4 per unit Product B 15 10 5 per unit b If manufacturer produces only product B Contribution margin Contribution per unitSales price per unit 100 515 See Answer

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QUESTION 4 CVP AnalysisGuide to marks: 20 marks – 4 for a, 4 for b, 4 for c, 8 fordShow all calculations to support your answers.A manufacturer can make two products, A and B. The followingdata are available:BProductABTotalSales price per unit$12$15Variable cost per unit$8$10Total fixed costs/month$5000(a)Calculate the unit contribution margin for eachproduct.(b)This month the manufacturer will specialise in making onlyProduct B. How many does he need to sell to break even?(c)If they specialise in making only A what is the breakeven salesvolume for the month in sales dollars?(d)He now decides to manufacture both A and B this month in theratio of 3 of A to 1 of B.(i)How many of each product must be sold to earn a profit of $3,500before tax for the month?(ii)How many of each product must be sold to earn a profit of$8,400 after tax (of 30c in the dollar) for the month?