Gwalior Sports Goods manufactures two different types of tennis tables (A & B).   Cost and other details of these two products are given below:

(i) Cost details of Product A and B

Information	Product A		Product B
Direct Costs Materials	Units	Cost per unit of material	Units	Cost per unit of materials
Material X	20 units	$ 8 per unit of material	40	$ 10 per unit of material
Material Y	40 units	$ 10 per unit of material	20	$ 8 per unit of material
Labour
Labour	6 hours	$ 30 per hour	10 hours	$ 20 per hour
Indirect Costs
Overheads (allocated)		$ 40 per unit of A		$ 50 per unit of B

(ii) Inventory Details of Gwalior Sports Goods

Gwalior has furnished inventory and other cost details as given below for the year 2018.

Information	1st Jan 2018	31st Dec 2018
Work in progress Inventory	75,000	65,000
Cost of Materials used		150,000
Direct Labour		120,000
Manufacturing overheads		60,000
Finished Goods Inventory	60,000	90,000

(c) Breakeven Analysis for one of its (Product C) Gwalior Sports Goods Manufacturers

Gwalior incurs fixed costs of $ 270,000 per annum for Product C. It manufactures and sells Product C for $ 1, 200 per unit. The variable cost to Sales Ratio is   70%.     

(d) Gwalior’s Proposal to reduce selling price of Product D

Gwalior proposes to reduce selling price of one of its products (Product D) to $ 110 (existing price is $ 120 per unit).   The variable cost been estimated as $ 50 per unit and fixed costs as $ 100,000 per annum.   The management accountant says that if this proposal is implemented then the sales units of product D will increase from 4,000 units to 5,000 units as there exists a demand for product D. The management accountant also suggests that there will be an no increase in fixed costs and variable cost per unit would remain the same.

(2) Using the information given above in (b (i) for Product A & Product B of Gwalior Sports Goods Manufacturers, Compute the total cost per unit (i.e. Materials + Labour + Overheads). (Note: Assume overheads costs given is calculated value

Answer rating: 100% (QA)

Product A Materials Cost Material X 20 units8 per unit16020 unit... View the full answer