Question 1

1. Explain briefly what action management can take to manage direct labour if this is expected to be a scarce resource.

Note: You must use the relevant academic literature and relevant practical examples or case studies to answer this question and include references appropriately as an evidence of your wider reading and research.

(15 marks)

2. Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the following expected information for the year 2021:

Selling price (per unit) Direct materials (per unit) Direct labour (per unit)	155.00 60.25 30.50

Other costs are estimated for the year 2021 based on the expected sales of 62,000 units. These costs are given below:

		Fixed Costs	Variable Costs
Operating Costs		420,000	1,750,000
Marketing Costs		350,000	122,500
Storage Costs		570,000	101,000
Administration Costs		232,000	-

For the year 2021, you are required to calculate:

1. the expected profit or loss

(5 marks)

2. breakeven point in units and sales revenue

(5 marks)

3. margin of safety in units and % change

(5 marks)

4. the profit/loss if the selling price is increased by 5% and sales quantity decreases by 50%

(5 marks)

5. the revised break-even point in units for (d)

(5 marks)

(Total 40 marks)