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A company makes a single product. The following is the cost structure: £ Selling price per unit 150 Direct material 40 Direct labour cost per unit 35 Variable overhead cost per unit 30 Total fixed costs 850,000 ======= Budgeted production and sales – 50,000 units Maximum possible production – 65,000 units a) i Calculate the budgeted profit. ii Calculate the break-even point in units. iii Calculate the profit if an extra £100,000 wa

A company makes a single product. The following is the cost structure: £ Selling price per unit 150 Direct material 40 Direct labour cost per unit 35 Variable overhead cost per unit 30 Total fixed costs 850,000 ======= Budgeted production and sales – 50,000 units Maximum possible production – 65,000 units a) i Calculate the budgeted profit. ii Calculate the break-even point in units. iii Calculate the profit if an extra £100,000 wa

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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 A company makes a single product. The following is the cost structure: 

£ 

Selling price per unit 150 Direct material 40 Direct labour cost per unit 35 Variable overhead cost per unit 30 Total fixed costs 850,000 ======= 

Budgeted production and sales – 50,000 units  

Maximum possible production – 65,000 units

  1. a) i Calculate the budgeted profit. 

 

ii Calculate the break-even point in units. 

 

iii Calculate the profit if an extra £100,000 was spent on marketing and 60,000 units are made  and sold. 


b) Explain the importance of accounting ratios. 

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