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5 marksCost-Volume-Profit (CVP) Analysis

CAPE Accounting Unit 2 · 2008 · Paper 2 · Question 3(b)(iii)

Pamela Codrington plans to open a day care centre with given estimated annual fixed costs and variable costs per child, charging a fee of $1,400 per child, with a maximum capacity of 180 children.

Calculate the margin of safety in dollars AND as a percentage of budgeted revenue, if the budgeted enrolment of the day care centre is 135 children.

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Other parts of this question

  1. 3(a)(i)Describe FOUR benefits that a business may gain from budgeting.[4 marks]
  2. 3(a)(ii)Distinguish between 'ideal' and 'practical standards'.[4 marks]
  3. 3(a)(iii)Identify the factors that should be considered in setting the standard cost for a product or service.[3 marks]
  4. 3(b)(i)Compute the contribution margin.[2 marks]
  5. 3(b)(ii)Calculate the number of children who must be enrolled in order for the centre to break even.[4 marks]
  6. 3(c)(i)Determine the amount of raw materials (in kg) needed to produce ONE unit of EACH product.[3 marks]
  7. 3(c)(ii)Determine the contribution margin per kg of material used in EACH product.[3 marks]
  8. 3(c)(iii)Prepare a schedule showing the total direct materials that will be required to produce the units estimated to be sold during the following month.[3 marks]
  9. 3(c)(iv)Cork Hill Company would like to maximize its income from the production of the three products. State the criteria that should be used by the company to…[1 mark]
  10. 3(c)(v)Determine the amount of EACH product that Cork Hill Company should produce during the following month.[3 marks]

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