Quelpr
3 marksCosting and Break-Even Analysis

CAPE Management of Business Unit 2 · 2011 (Specimen) · Paper 2 · Question 2(a)(iii)

A firm manufactures and sells widgets with a selling price of 100 each, variable cost of 15 per unit, and total fixed costs of $3400.

Using the sales level of 100 units, calculate total profits using marginal costing format.

This question uses a figure or table from the paper — you'll see it when you practise.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 2(a)(i)Using the sales level of 100 units, calculate the contribution per unit.[2 marks]
  2. 2(a)(ii)Using the sales level of 100 units, calculate the total cost.[3 marks]
  3. 2(b)(i)With the use of a labelled diagram, illustrate the breakeven point of the firm.[5 marks]
  4. 2(b)(ii)a)Determine the number of units required for the firm to break even.[2 marks]
  5. 2(b)(ii)b)Determine the amount of sales required for the firm to break even.[2 marks]
  6. 2(b)(iii)On the same diagram in (b)(i), indicate the margin of safety. State the importance of knowing the margin of safety.[2 marks]
  7. 2(c)(i)The firm is considering purchasing widgets at $30 each instead of manufacturing them, leaving the factory idle. Advise the firm as to a course of action.[4 marks]
  8. 2(c)(ii)State TWO non-accounting factors which the firm must take into consideration when making its decision to buy rather than manufacture.[2 marks]

More practice: the rest of this paper · more Costing and Break-Even Analysis questions · all CAPE Management of Business Unit 2 past papers