The Cockpit Country Industrial Co. Ltd has a maximum production capacity of 20 000 units. Each unit sells for $25.

Question:

The Cockpit Country Industrial Co. Ltd has a maximum production capacity of 20 000 units. Each unit sells for $25. 

The following are the costs for a single unit of production.


Required 

(a) Using marginal costing, calculate the net profit if: 

(i) 15 000 units are produced and sold 

(ii) 18 000 units are produced and sold.

(b) Calculate the number of units required to break even. 

(c) Calculate the profit at full production capacity if all production is sold at the reduced price of $24. 

(d) State the possible advantages and disadvantages of reducing the normal selling price. 

(e) State five assumptions which are made in the preparation of break-even charts, and state one limitation of each assumption.

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Question Details
Chapter # 33- Marginal costing
Section: Exercises
Problem: 10
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Question Posted: August 29, 2023 08:17:17