Revision Questions Solutions

Revision Questions Solutions - 3 a Contribution...

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3) a) Contribution calculations: Product Castle Ship House Car £ £ £ £ Selling price per unit 30 54 29 25 Less Variable cost per unit: Direct materials 10 20 6 8 Direct labour 12 24 5 12 22 44 11 20 Contribution per unit 8 10 18 5 Limiting factor Direct material at £4 / kg 2.5 kg 5 kg 1.5 kg 2 kg Contribution per kg of Direct material 3.2 2 12 2.5 Ranking 2 4 1 3 (Limiting factor) Production plan Units Quantity of Direct material kg Cumulative quantity of Direct material kg Contribution £ Cumulative Contribution £ House 1,250 1,875 1,875 22,500 22,500 Castle 1,000 2,500 4,375 8,000 30,500 Car 1,375 2,750 7,125 6,875 37,375 Ship 575
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Unformatted text preview: 2,875 10,000 5,750 43,125 Total 10,000 43,125 Less Fixed costs 12,000 Profit 31,125 1 b) Please, note that the following does not constitute the complete / full answer to the question. The following is just a collection of key points which should be developed further / in detail and put together in a coherent, well-articulated answer. Marketing and other implications: - loss leaders, - sub-contracting, - valued customers, - inter-dependent demand, - loss of range, - image, etc. 2...
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