please i need to know how to calculate the Unit contribution
see the sction
Section 2
You should spend about 90 minutes on this section.
Against each task is a recommended time for that task, but please note that these times are guidelines only.
Data
TPL currently costs its products using full absorption costing (FAC) principles. It is considering what the effect would be of using marginal costing (MC) principles instead.
The following budgeted information relates to one of the company’s domestic paint products for December:
• Selling price per can £15
• Prime cost per can £3
• Variable production cost per can £4
• Budgeted fixed production overhead £100,000 per month
• Budgeted production 20,000 cans per month
• Budgeted sales 18,000 cans per month
Task 2.1 (15 minutes)
(a) Calculate the contribution per can manufactured (on a MC basis).
(b) Calculate the profit per can manufactured (on a FAC basis).
Task 2.1, continued
(c) State which costing principle would give the higher reported profit in the month.
(You are not required to make any calculations here.)
Data
The following forecast sales, cost and target profit information relates to type DP18 and type DP20 paints for a period:
Paint type DP18 DP20
Forecast sales (cans) 45,000 55,000
Marginal cost of production (£) 315,000 440,000
Sales revenue (£) 630,000 715,000
Target profit (£) 126,000 96,000
Total fixed costs (£) 420,000
Fixed costs are apportioned: 40% to the type DP18 and 60% to the type DP20 paints.
Task 2.2 (20 minutes)
(a) Complete the table below to calculate:
• the budgeted break-even sales, in number of cans, for each of the two types of paint
• the margin of safety over the forecast sales (in cans) for each of the two types of paint
• the margin of safety as a percentage (to 2 decimal places)
• the sales, in cans, to achieve the target profit
Product DP18 DP20
Fixed costs (£)
Unit contribution (£)
Break-even sales (cans)
Forecast sales (cans)
Margin of safety (cans)
Margin of safety (%)
Sales to achieve target profit (cans)
see the sction
Section 2
You should spend about 90 minutes on this section.
Against each task is a recommended time for that task, but please note that these times are guidelines only.
Data
TPL currently costs its products using full absorption costing (FAC) principles. It is considering what the effect would be of using marginal costing (MC) principles instead.
The following budgeted information relates to one of the company’s domestic paint products for December:
• Selling price per can £15
• Prime cost per can £3
• Variable production cost per can £4
• Budgeted fixed production overhead £100,000 per month
• Budgeted production 20,000 cans per month
• Budgeted sales 18,000 cans per month
Task 2.1 (15 minutes)
(a) Calculate the contribution per can manufactured (on a MC basis).
(b) Calculate the profit per can manufactured (on a FAC basis).
Task 2.1, continued
(c) State which costing principle would give the higher reported profit in the month.
(You are not required to make any calculations here.)
Data
The following forecast sales, cost and target profit information relates to type DP18 and type DP20 paints for a period:
Paint type DP18 DP20
Forecast sales (cans) 45,000 55,000
Marginal cost of production (£) 315,000 440,000
Sales revenue (£) 630,000 715,000
Target profit (£) 126,000 96,000
Total fixed costs (£) 420,000
Fixed costs are apportioned: 40% to the type DP18 and 60% to the type DP20 paints.
Task 2.2 (20 minutes)
(a) Complete the table below to calculate:
• the budgeted break-even sales, in number of cans, for each of the two types of paint
• the margin of safety over the forecast sales (in cans) for each of the two types of paint
• the margin of safety as a percentage (to 2 decimal places)
• the sales, in cans, to achieve the target profit
Product DP18 DP20
Fixed costs (£)
Unit contribution (£)
Break-even sales (cans)
Forecast sales (cans)
Margin of safety (cans)
Margin of safety (%)
Sales to achieve target profit (cans)
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