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

Costs and cost behaviour — practice question

T Limited makes just one product. The budgeted figures below are provided. The selling price per unit is $36. Budgeted monthly output and sales are 1200 units.
(a)[4]

Calculate the monthly break-even point in units.

(b(i))[1]

Calculate the margin of safety in units.

(b(ii))[1]

Calculate the margin of safety in revenue.

(c)[3]

Identify three assumptions made when using break-even analysis.

(d(i))[1]

Calculate the contribution to sales ratio.

(d(ii))[2]

Calculate the profit made in January 2021.

(e(i))[7]

Calculate the profit for March 2021 for Option A.

(e(ii))[3]

Calculate the profit for March 2021 for Option B.

(f)[5]

Advise the directors which option they should choose. Justify your advice by considering both options.

(g)[3]

State three limitations of budgetary control.

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