Explain two reasons why a manufacturing business may switch from absorption costing to marginal costing.
Calculate the contribution-to-sales ratio.
Calculate the break-even point in sales revenue.
Calculate the sales revenue required to achieve the target profit of $140\,000$.
State three reasons why a special order with a negative contribution could still be taken.
Calculate the optimum profit to be made in January 2025.
Calculate the additional profit to be made if the shortfall in materials is made up by the overseas supplier charging $2.60$ per kg with a delivery charge of $8000$.
Advise the directors whether they should buy the shortfall in materials from the overseas supplier or not. Justify your answer by considering both the benefits and the drawbacks.