# A manufacturing company with a single product has the following sales and production results over three financial

## Question:

A manufacturing company with a single product has the following sales and production results over three financial periods:

The selling price per unit has remained at £10, and direct material and direct labour costs per unit at £5. All manufacturing overheads are absorbed into product cost at predetermined rates per unit of output. Any under/over absorbed balances are transferred to profit and loss in the period in which they arise. Variable manufacturing overhead absorption was predetermined at a rate of £1 per unit in each period. Fixed manufacturing overheads were expected to be £180,000 per period. Normal capacity is 60,000 units of output per period.
Manufacturing overheads actually incurred were as follows:

Assume that no further overheads are incurred (i.e. other than manufacturing overheads).
Required:

(a) Calculate the expected break even point per period.

(b) Calculate the profit/loss that arose in each of the three periods.