Kunal's Security Gates,
Kunal's Security Gates, owned by Sbu Kunal. makes security gates according to orders received.
The information below is for the firrpricial year onded 31 August 2016.
REQUIRED:
Calculate the break-even point for the period ended 31 August 2016.
Compare and comment on the break-even point and the level of production achieved over the last two years. Quote figures.
Provide TWO reasons for the increase in direct material cost and suggest ONE way in which Kunal can control this cost.
INFORMATION:
A. Cost information for the year ended 31 August:
|
|
2016 |
2015 |
|
|
TOTAL AMOUNT |
UNIT COST |
UNIT COST |
| Direct material cost |
Variable cost |
86 400 |
R180 |
R156 |
| Direct labour cost |
Variable cost |
122 400 |
R255 |
R242 |
| Factory overhead cost |
Fixed cost |
76 800 |
R160 |
R156 |
| Selling and distribution cost |
Variable cost |
74 400 |
R155 |
R152 |
| Administration cost |
Fixed cost |
60 000 |
R125 |
R129 |
B. Additional information for the financial year ended 31 August:
|
2016 |
2015 |
| Total sales |
R412 800 |
R459 000 |
| Selling price per unit |
R860 |
R850 |
| Number of units produced and sold |
480 units |
540 units |
| Break-eVen point |
? |
508 units |