Question: QUESTION # 1 Patsy smith is planning to sell her special knife for $15 per unit. She purchases units from a local distributor for $6

QUESTION # 1 Patsy smith is planning to sell her special knife for $15 per unit. She purchases units from a local distributor for $6 each. She can return any unsold units for a full refund. Fixed costs for booth rental, including lighting and security is $450.

Required

i. Compute the breakeven point in units sold. (5 marks) ii. Suppose the unit purchased is $5 instead of $6 but the selling price is unchanged. Compute the new breakeven point in units sold. (5 Marks)

QUESTION # 2

Elmo has the following information for the month of October, its first month of operations

Work in Process October 1 0
Units completed and transfered out in October 120, 000
Work in Process, October 30 32,000
100% completed for materials
80% completed for conversion costs

Costs added in October

Materials $145, 900
Dirct labour $96,000
Overheads $108,000

Required: (1.) Determine the equivalent units of production for October. (2 marks)

2.) Determine the cost of the ending work-in-process. (3.) Determine the cost of goods completed. (4) What is meant by the term equivalent full units? (3 marks) (3marks) (2 marks)

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