Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. williams ltd manufactures and sells a single produ

Williams Ltd manufactures and sells a single product. The selling price is R18. The following information...

Free

80.2K

Verified Solution

Question

Accounting

Williams Ltd manufactures and sells a single product. Theselling price is R18. The following information relates to itsyearly production and cost data. (Assume that there is no change tothe stock level of the company.)
Unit Total
Year Volume Cost R
1 300 000 4 000 000
2 150 000 2 800 000
3 420 000 6 600 000
4 280 000 3 900 000
5 230 000 3 200 000
6 120 000 2 100 000
Required:
1. Based on the above cost and volume data, use the high–low methodto identify variable cost per unit and annual fixed costs for thecompany.
5 marks
2. On the basis of your answers in part (1) above, calculate thebreakeven point of the company in both units and sales revenue.

Answer & Explanation Solved by verified expert
4.0 Ratings (807 Votes)

1
Highest Cost                 6,600,000
Lowest Cost                 2,100,000
Difference                 4,500,000
Highest Activity                   420,000
Lowest Activity                   120,000
Difference                   300,000
Variable cost per unit = Divide the difference in the cost by the difference in the activity
= 4,500,000/300,000
= 15.00
Highest Lowest
Variable cost                 6,300,000         1,800,000
Fixed Cost                   300,000            300,000
Total Cost                 6,600,000         2,100,000
2 Per Unit
Sales 18
Less: Variable cost 15
Contribution margin 3
Fixed cost                   300,000
Break even point = Fixed cost/ Contribution margin per unit
= 300,000 / 3
=                   100,000 units
Sales Revenue at Break even point = 100,000 x 18 = 1,800,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Given : the plane region R is bounded by the curves ? = 0 ,...

Physics
1.2K views

A small object moves along the xx-axis with acceleration ax(t)ax(t) = −(0.0320m/s3)(15.0s−t)−(0.0320m/s3)(15.0s−t). At tt = 0 the...

Physics
1.2K views

Part a of the drawing shows a resistor and a charged capacitor wired in series...

Calculus
1.2K views

Given that (x, y) = (x+2y)/k if x = -2,1 and y = 3,4, is...

Accounting
1.2K views

Macon Mills is a division of Bolin Products, Inc. During the...

Accounting
1.2K views

Respone following posts ( total 150 words) 1. Recently, I bought a carry on luggage...

Accounting
1.2K views

Refer to the financial statements of The Home Depot in Appendix A. (Note: Fiscal 2016...

Accounting
1.2K views

Fred has a business of selling computers taking orders online and customers click and collect...

Accounting
1.2K views

A company budgets unit sales of 720 in January, 800 in February, 860 in March,...

Finance
1.2K views

The following table shows your stock positions at the beginning of the year, the dividends...

Accounting
1.2K views

Just Dew It Corporation reports the following balance sheet information for 2008 and 2009. ...

Finance
1.2K views

solve for 1a,1b,1c,1d all parts, show work (Related to The Business of Life:...