Andreea Ltd. manufactures t-shirts, which sell at 15 each. Table 5 shows the sales and total...
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Andreea Ltd. manufactures t-shirts, which sell at £15 each. Table 5 shows the sales and total costs for the period July 2020 to December 2020. Monthly fixed costs have been the same each month and it is expected they will remain constant for the remainder of the financial year (up to and including March 2021). Table 5 - Sales Volume and Total Costs Month Sales (Units) July August September October November December 2. 3. Required for this part (The report should not exceed 400 words in total.) 1. With reference to Table 5 and using the high-low method, estimate the variable cost pert-shirt produced and sold. Show your calculations. 4. 14,502 15,000 13,320 19,100 24,806 36,000 Total Costs 195,020 200,400 183,200 241,000 308,060 400,000 Using the high-low method, estimate the monthly fixed cost. Show your calculations. Using the information in (1) and (2) above, how many t-shirts should Andreea Ltd. produce and sell in January 2021 to break even? Show your calculations. How many t-shirts does the company need to produce and sell to achieve a profit target of £200,000 in January 2021? Show your calculations. 5. What is the margin of safety for January 2021, assuming the profit target for that month has been achieved? Show your calculations. 6. Write a 400-word report, addressed to the sales manager of Andreea Ltd. The report should: a. Explain, with reference to the scenario and the table provided, why the high-low method had to be used in this case; b. State and interpret the fixed and variable costs; Andreea Ltd. manufactures t-shirts, which sell at £15 each. Table 5 shows the sales and total costs for the period July 2020 to December 2020. Monthly fixed costs have been the same each month and it is expected they will remain constant for the remainder of the financial year (up to and including March 2021). Table 5 - Sales Volume and Total Costs Month Sales (Units) July August September October November December 2. 3. Required for this part (The report should not exceed 400 words in total.) 1. With reference to Table 5 and using the high-low method, estimate the variable cost pert-shirt produced and sold. Show your calculations. 4. 14,502 15,000 13,320 19,100 24,806 36,000 Total Costs 195,020 200,400 183,200 241,000 308,060 400,000 Using the high-low method, estimate the monthly fixed cost. Show your calculations. Using the information in (1) and (2) above, how many t-shirts should Andreea Ltd. produce and sell in January 2021 to break even? Show your calculations. How many t-shirts does the company need to produce and sell to achieve a profit target of £200,000 in January 2021? Show your calculations. 5. What is the margin of safety for January 2021, assuming the profit target for that month has been achieved? Show your calculations. 6. Write a 400-word report, addressed to the sales manager of Andreea Ltd. The report should: a. Explain, with reference to the scenario and the table provided, why the high-low method had to be used in this case; b. State and interpret the fixed and variable costs;
Expert Answer:
Answer rating: 100% (QA)
1 Variable Cost per TShirt Lets consider the highest and lowest sales months which are December and September Variable Cost per UnitChange in Total Costs Change in Sales Volume Variable Cost per Unit ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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