b) per unit Total Marks

Selling price 311 248,800.00 1

Variable cost( W1) 125 100,000.00 1C
Contribution/unit 186 148,800 1
Contribution/unit 186
BEP point in Units 478.49 479 1C

Also award marks

for use of
contribution sales
BEP point in sales 148,811.83 1C ratio

W1
High Low Method
Variable cost/unit 125 2

Fixed cost
HAC-(Variable cost x HU) 89,000 1

Selling Units to reach 12 000 target profit

Before tax profit 15,731.52 1

(FC+ Target Profit/Contribution per Unit 563.07 564 1C

Margin of safety Units 321 1C

Margin of safety percentage 40% 1C

Maximum 12
c)

Cost Detail Amount

Lost Contribution 30,000 1
Cancelletion Penalty 15,000 1
Camera - 1 not an incremental cost
microphones 1,250 1
Portable mics 600 1
cables 700 1
special cable 500 1
supervisor salary - 1 not an incremental cost
supervisor allowance 7,200 1
additional staffer 6,000 1
fuel cost 960 2
Relevant Cost 62,210
Mark up 15% 9,332 1C
minimum price 71,542 1C

Maximum 14
d)
Budgeted profit Actual profit Variance
Sales 500,000 576,000 76,000 1
Variable costs
Aluminium alloy - 150,000 - 159,600 - 9,600 1
Thermoset Plastic - 70,000 - 70,000 - 1
Direct labour - 100,000 - 140,400 - 40,400 1
Fixed costs - 15,000 - 13,500 1,500 1
Profit 165,000 192,500 27,500

Reconciliation of budgeted profit to actual profit

Budgeted Profit 165,000 1C

Sales variances
Sales price variance (SP-AP)AQ - 24,000 A 1
Sales volume variance(SV-AV)SP 100,000 F 1
Material variance
Usage variance(SQ-AQ)SP
Aluminium - 7,500 A 2
Thermoset Plastic 14,000 F 2
Price variance(SP-AP)AQ
Aluminium - 2,100 A 1
Thermoset Plastic - 14,000 A 1
Labour variance
Labour rate variance( SR-AR)AH - 5,400 A 1
Labour efficiency variance(SH-AH)SR - 35,000 A 1
Overhead variance
Fixed Overheard capacity (AQ-SQ)OAR -3000 F 1
Fixed Overhead Expenditure 6750 F 1
Fixed overhead volume efficiency(AC-BC)*AOR -2250 A 1
Actual Profit 192,500 -
1
Presentation -
maximum 20

Budgeted Actual
Sales and production 10000 12000
Units 50 48
Price
Aluminium alloy
kgs total 20000 21000
Price 7.5 7.6
Kgs per unit 2 1.75
Thermoset Plastic
Kgs 10000 8000
Kgs per unit 1 0.67
Price 7 8.75
Direct labour

Hours 40000 54000

Price 2.5 2.6

Fixed costs 15000 13500

OAR 0.375
Cost Drivers
floor area m Kwh Warehouse floor are Hours spent by supervisor

decoder 250 800 250 70

satelite 500 1200 750 80
packaging 350 500 600 50
total 1100 2500 1600 200 1

Allocation
item cost Cost Driver cost driver quantity cost driver/unit
Factory Rental costs 5,500.00 floor area 1100 5.00 1.5

award 0.5 mark for

identifying a cost
driver and 1 mark
for the cost driver
Warehouse rental co 8,000.00 warehouse floor 1600 5.00 1.5 quantity
Supervisor salaries 1,200.00 hours spent 200 6.00 1.5
Electric bill 800.00 kwh 2500 0.32 1.5

Overheads
Decoder Satellite Dish Packaging division
Factory Rental costs 1250 $ 2,500.00 $ 1,750.00 1
Warehouse rental co$ 1,250.00 $ 3,750.00 $ 3,000.00 1
Supervisor salaries $ 420.00 $ 480.00 $ 300.00 1
Electric bill $ 256.00 $ 384.00 $ 160.00 1
$ 3,176.00 $ 7,114.00 $ 5,210.00 1C
12