Problem: Angelicus and Co. manufactures three different qualities of lock, Domestic, Commercial and Industrial. The company’s results for the year ended 31 March 2003 were as follows.
|
Domestic |
Commercial |
Industrial |
Total |
| Sales (units) |
120000 |
45000 |
56250 |
221 250 |
|
|
|
|
|
|
$0 |
$0 |
$0 |
$0 |
| Sales (total value) |
240 |
180 |
450 |
870 |
|
|
|
|
|
| Total costs |
|
|
|
|
| Direct material |
108 |
66 |
84 |
258 |
| Direct labour |
60 |
30 |
150 |
240 |
| Variable overheads |
24 |
54 |
120 |
198 |
| Fixed overheads |
54 |
33 |
42 |
129 |
|
246 |
183 |
396 |
825 |
|
|
|
|
|
| Profit (loss) |
6 |
3 |
54 |
45 |
Fixed overheads are absorbed on the basis of 50% of direct materials.
REQUIRED
(a) For the year ended 31 March 2003 calculate, for each type of lock,
(I) the contribution per unit;
(ii) the contribution as a percentage of sales.
Give answers to a maximum of three decimal places. Show alt workings.
(b) calculate the break-even point for each type of lock in both units and dollars
(c) advise wheter Angelicus should cease production of domestic and commercial locks. Give your reasons