Hermione Ltd. produces magical wands. budgeted production equals magical wands and the budgeted fixed production overheads equals £282,000. The actual production level was 20% lower than estimated and the actual fixed production overheads equal £300,000. The selling, general and administrative expenses equal £18,250. Hermione Ltd. sells 200 magical wands for a price of £150 per unit. The variable production cost per unit is £56. Required: a) Generate the profit statement using the absorption costing technique. b) Considering your answer in a), which is your advice for Hermione Ltd.? Explain your answer in detail. c) Would your answers in a) and b) change if the amount of magical wands sold equals 400 units? Explain your answer in detail.

Hermione Ltd. produces magical wands. budgeted production equals magical wands and the budgeted fixed production overheads equals £282,000. The actual production level was 20% lower than estimated and the actual fixed production overheads equal £300,000. The selling, general and administrative expenses equal £18,250. Hermione Ltd. sells 200 magical wands for a price of £150 per unit. The variable production cost per unit is £56. Required: a) Generate the profit statement using the absorption costing technique. b) Considering your answer in a), which is your advice for Hermione Ltd.? Explain your answer in detail. c) Would your answers in a) and b) change if the amount of magical wands sold equals 400 units? Explain your answer in detail.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Hermione Ltd. produces magical wands. The budgeted production equals 500 magical wands and the budgeted fixed production overheads equals £282,000. The actual production level was 20% lower than estimated and the actual fixed production overheads equal £300,000. The selling, general and administrative expenses equal £18,250. Hermione Ltd. sells 200 magical wands for a price of £150 per unit. The variable production cost per unit is £56. Required: a)Generate the profit statement using the absorption costing technique b)Considering your answer in a), which is your advice for Hermione Ltd.? Explain your answer in detail c)Would your answers in a) and b) change if the amount of magical wands sold equals 400 units? Explain your answer in detail.
Hermione Ltd. produces magical wands. The budgeted production equals 500 magical wands and the budgeted fixed production overheads equals £282,000. The actual production level was 20% lower than estimated and the actual fixed production overheads equal £300,000. The selling, general and administrative expenses equal £18,250. Hermione Ltd. sells 200 magical wands for a price of £150 per unit. The variable production cost per unit is £56. Required: a) Generate the profit statement using the absorption costing technique. b) Considering your answer in a), which is your advice for Hermione Ltd.? Explain your answer in detail. c) Would your answers in a) and b) change if the amount of magical wands sold equals 400 units? Explain your answer in detail.
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Hardaker Limited produces and sells two products. Product A sells for £12 per unit and has a total variable cost of £7.90, while for £17 per unit and has a total variable cost of £11.20. For every 4 units of Product A sold, three of product B are sold. Hardaker Limited fixed costs are £131,820 per period. Budgeted sales revenue for the next period is £398,500. Required: (a) Calculate the Breakeven points in Units. b) Calculate the Margin of Safety in Units (c) Evaluate the relevance of Break-Even Analysis in the modern manufacturing environment.
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Rachel Ltd. manufactures chopping boards. Each unit sells for €15. Variable costs are €5.50 per unit. Fixed costs are budgeted at €87,903.5 for the forthcoming financial year and the company expects to sell 15,000 units. What is the margin of safety (to the nearest €)? a) €54,597 b) €62,520 c) €138,795 d) €86,205
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