Nostrodame started their operations three months ago. They manufacture winter coats for Doberman dogs. They just...

 

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Nostrodame started their operations three months ago. They manufacture winter coats for Doberman dogs. They just finished their second batch of coats and are eager to determine a cost structure for the future. The total cost per batch are provided below: Batch 1 Batch 2 25 000 30 000 Quantity Material Labour Indirect materials Machine costs Rental R 3 000 000 5 000 000 800 000 685 000 280 000 10 690 000 R 600 000 3 5 800 000 860 000 760 000 280 000 12 230 000 1. They are selling the coats for R420 per unit. 2. Management received a request for the next month of 40 000 coats from the Crazy Pet Store chain and another order from Cats Hyper for 10 000. Although Cats Hyper placed a small order, they are prepared to increase their future orders if they are satisfied with the quality of the coats. 3. Nostrodame agreed to sell the coats to Cats Hyper at variable cost plus 12% as an opening special. Required a) b) c) d) Determine the variable cost per unit manufactured and the total fixed costs. Calculate the break-even volume and amount for Nostrodame without taking point 3 into account. Determine the total selling price for the order received from Cats Hyper. How much additional profit will the company make if an additional order of 3 000 coats were received and sold at R380 per coat? Nostrodame started their operations three months ago. They manufacture winter coats for Doberman dogs. They just finished their second batch of coats and are eager to determine a cost structure for the future. The total cost per batch are provided below: Batch 1 Batch 2 25 000 30 000 Quantity Material Labour Indirect materials Machine costs Rental R 3 000 000 5 000 000 800 000 685 000 280 000 10 690 000 R 600 000 3 5 800 000 860 000 760 000 280 000 12 230 000 1. They are selling the coats for R420 per unit. 2. Management received a request for the next month of 40 000 coats from the Crazy Pet Store chain and another order from Cats Hyper for 10 000. Although Cats Hyper placed a small order, they are prepared to increase their future orders if they are satisfied with the quality of the coats. 3. Nostrodame agreed to sell the coats to Cats Hyper at variable cost plus 12% as an opening special. Required a) b) c) d) Determine the variable cost per unit manufactured and the total fixed costs. Calculate the break-even volume and amount for Nostrodame without taking point 3 into account. Determine the total selling price for the order received from Cats Hyper. How much additional profit will the company make if an additional order of 3 000 coats were received and sold at R380 per coat?

Answer rating: 100% (QA)

a To determine the variable cost per unit and total fixed costs we can calculate the cost components for both batches and then find the average per un... View the full answer