Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

Ravi makes two products, Exe and Wye. Both products have fixed costs allocated to them. The chart displays budgeted data for Exe.
(a(i))[1]

Identify the break-even point in dollars shown by the chart.

(a(ii))[1]

Identify the allocated fixed costs in dollars from the chart.

(a(iii))[1]

Identify the margin of safety in dollars from the chart.

(a(iv))[1]

Identify the profit in dollars from the chart.

(b)[10]

Calculate, for product Wye only, how these changes affect the budgeted total profit for 105000 units.

(c)[5]

Calculate, for product Wye only, how these changes affect the budgeted break-even point in dollars.

(d)[2]

Calculate, for product Wye only, how these changes affect the budgeted margin of safety in units.

(e)[5]

Recommend whether or not Ravi should go ahead with these changes. Justify your answer.

(f)[4]

State four benefits to a business of planning for the future.

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