Top Plastics Ltd makes and sells a single product. In January 2023, it produced and sold 30,000 units. The Information pertaining selling and production costs is as follows: Selling price per unit----------------------------------------- =$25 Direct materials cost per unit ------------------------------- =$6 Direct labour cost per hour --------------------------------- =$9 Variable manufacturing overhead per unit---------------- =$2 Variable selling expenses per unit-------------------------- =$4 Fixed manufacturing overhead--------------------------- =$160,000 Fixed admin and distribution costs---------------------- =$50,000 Help the company understand the cost structure by calculating the following: Contribution margin. (03 marks) Contribution margin per unit. (03 marks) Contribution margin percentage. (03 marks) Number of units that would be required to break-even. (03 marks) Break - even amount. (03 marks) What are the limitations of CVP analysis? (04 marks)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  1. Top Plastics Ltd makes and sells a single product. In January 2023, it produced and sold 30,000 units. The Information pertaining selling and production costs is as follows:

Selling price per unit----------------------------------------- =$25

Direct materials cost per unit ------------------------------- =$6

Direct labour cost per hour --------------------------------- =$9

Variable manufacturing overhead per unit---------------- =$2

Variable selling expenses per unit-------------------------- =$4

Fixed manufacturing overhead--------------------------- =$160,000

Fixed admin and distribution costs---------------------- =$50,000

Help the company understand the cost structure by calculating the following:

  1. Contribution margin. (03 marks)
  2. Contribution margin per unit. (03 marks)
  3. Contribution margin percentage. (03 marks)
  4. Number of units that would be required to break-even. (03 marks)
  5. Break - even amount. (03 marks)
  6. What are the limitations of CVP analysis? (04 marks)
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