Alpha Ltd manufactures and sells a fan heater. At the current level of output of X...
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Alpha Ltd manufactures and sells a fan heater. At the current level of output of X units, the required direct material is £8 per unit and direct labour is £Y per unit, annual fixed costs are £Z and unit selling price is £25. Last week, a new customer approached the Company for a one-time special order of T units of its product for £23 each. The company realize that they have reached maximum production capacity and in order to meet this special order, they need to expand their capacity. This expansion will incur additional fixed costs of £5,000 while other costs would remain unchanged. This expansion has also some negative impacts on environment and employees' health and wellbeing. Student number 5th digit 0 or 1 or 2 or 3 4 or 5 or 6 7 or 8 or 9 Z Y £10 £45,000 £11 £40,000 X 15,000 17,000 19,000 £13 £60,000 T 3000 3500 4000 Required: - As the management accountant of Alpah Itd, you are required to write a report to Chief Financial Officer (CFO) presenting annual net profit, break-even point and margin of safety based on the current level of output and comment on your results. Likewise, using your management accounting knowledge and incremental profit analysis. appraise the offer of the new customer in deciding whether to accept or reject the one- time special order (include all relevant calculations). Your report to directors should take into consideration the financial as well as non-financial factors. Alpha Ltd manufactures and sells a fan heater. At the current level of output of X units, the required direct material is £8 per unit and direct labour is £Y per unit, annual fixed costs are £Z and unit selling price is £25. Last week, a new customer approached the Company for a one-time special order of T units of its product for £23 each. The company realize that they have reached maximum production capacity and in order to meet this special order, they need to expand their capacity. This expansion will incur additional fixed costs of £5,000 while other costs would remain unchanged. This expansion has also some negative impacts on environment and employees' health and wellbeing. Student number 5th digit 0 or 1 or 2 or 3 4 or 5 or 6 7 or 8 or 9 Z Y £10 £45,000 £11 £40,000 X 15,000 17,000 19,000 £13 £60,000 T 3000 3500 4000 Required: - As the management accountant of Alpah Itd, you are required to write a report to Chief Financial Officer (CFO) presenting annual net profit, break-even point and margin of safety based on the current level of output and comment on your results. Likewise, using your management accounting knowledge and incremental profit analysis. appraise the offer of the new customer in deciding whether to accept or reject the one- time special order (include all relevant calculations). Your report to directors should take into consideration the financial as well as non-financial factors.
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Answer rating: 100% (QA)
Answer Report to Chief Financial Officer CFO Decision Analysis for Alpha Ltd Subject Analysis of Annual Net Profit BreakEven Point and Special Order Appraisal Dear CFO I am pleased to present to you a ... View the full answer
Related Book For
Calculus For Scientists And Engineers Early Transcendentals
ISBN: 9780321849212
1st Edition
Authors: William L Briggs, Bernard Gillett, Bill L Briggs, Lyle Cochran
Posted Date:
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