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4 marksCost-Volume-Profit (CVP) Analysis

CAPE Accounting Unit 2 · 2009 · Paper 2 · Question 3(c)(iii)

Negril's Confectionery Company provides operational and cost data for expected sales of gourmet chocolate for the coming year.

Compute the company's expected net income for next year.

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Other parts of this question

  1. 3(a)(i)Calculate the total standard cost of materials (including packaging) for a pair of bookends.[7 marks]
  2. 3(a)(ii)List two parties that would typically participate in the development of material standards.[2 marks]
  3. 3(a)(iii)For any one of the parties listed in (a)(ii), indicate their role in the development of material standards.[1 mark]
  4. 3(b)(i)Compute the price and efficiency variances of the materials used in the production of Right Lube.[5 marks]
  5. 3(b)(ii)Materials were purchased from a new supplier seeking a long-term purchase contract. Recommend whether the company should sign the contract, supporting your…[2 marks]
  6. 3(b)(iii)Compute the rate and efficiency variances for direct labour employed in the production of Right Lube.[6 marks]
  7. 3(b)(iv)During November, the labour mix was changed from 20 senior technicians and 15 assistants to 15 senior technicians and 20 assistants to save costs. Recommend…[2 marks]
  8. 3(c)(i)Calculate the current contribution margin per box of gourmet chocolate.[1 mark]
  9. 3(c)(ii)Compute the current break-even point, in dollars, before the cost increase.[3 marks]
  10. 3(c)(iv)Assuming the cost of chocolate increases by 20 percent, calculate the new selling price required to maintain the current contribution margin rate.[2 marks]

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