Business Operations Assignment 3 – Costing Techniques
Introduction/Scenario
All business operations have cost attached to them, determine the
answers to the following costing questions, stating the equations you are
using, showing your working and explaining how each answer has been
determined:
Task Ia (P7)
i) A product has a fixed cost per year of £30 000 and a variable
cost per item of £15. The selling price per item is £40. What will
be the profit if there are sales of 5 000 products per year?
£95,000
ii) If a product has a variable cost per item of £32 and fixed costs
which need to be absorbed by each of these products of £14, calculate the
overall selling price, assuming the company wants to gain 30% profit on
top of the manufacturing costs.
£59.80
iii) A product has a fixed cost per year of £30 000 and a variable
cost per item of £13. The selling price per item is £33. How many
items need to be sold per year for a profit of £40 000 to be
made?
3500
Task 1b (P7)
VoltMax has analysed its fixed and overhead costs relating to its standard
charger which together amount to £70 000 while the variable costs of its
standard charger amount to £11 per unit manufactured.
Construct a break-even chart and use the chart to determine:
a) The break-even production volume when the charger is sold at:
i: £20 per unit
, ii: £30 per unit
b) The profit for a production quantity of 10 000 units if the selling price is
£30 per unit.
£120,000
Introduction/Scenario
All business operations have cost attached to them, determine the
answers to the following costing questions, stating the equations you are
using, showing your working and explaining how each answer has been
determined:
Task Ia (P7)
i) A product has a fixed cost per year of £30 000 and a variable
cost per item of £15. The selling price per item is £40. What will
be the profit if there are sales of 5 000 products per year?
£95,000
ii) If a product has a variable cost per item of £32 and fixed costs
which need to be absorbed by each of these products of £14, calculate the
overall selling price, assuming the company wants to gain 30% profit on
top of the manufacturing costs.
£59.80
iii) A product has a fixed cost per year of £30 000 and a variable
cost per item of £13. The selling price per item is £33. How many
items need to be sold per year for a profit of £40 000 to be
made?
3500
Task 1b (P7)
VoltMax has analysed its fixed and overhead costs relating to its standard
charger which together amount to £70 000 while the variable costs of its
standard charger amount to £11 per unit manufactured.
Construct a break-even chart and use the chart to determine:
a) The break-even production volume when the charger is sold at:
i: £20 per unit
, ii: £30 per unit
b) The profit for a production quantity of 10 000 units if the selling price is
£30 per unit.
£120,000
