Question 1:
Firth Ltd has fixed costs of €12,000. The variable costs are €3 per unit. The revenue (selling
price) is €9 per unit.
Required:
You are required to draft a schedule as follows filling in the columns for each stage up to
10,000 units.
No. of
units
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Fixed cost
€
Variable
cost
€
Total cost
€
Revenue
€
Profit
€
Loss
€
Question 2:
Garner plc has fixed costs of €36,000. The variable costs are as follows:
Labour
€7 per unit
Materials
€2 per unit
Variable Overheads €5 per unit
The revenue (selling price) is €40 per unit.
Required:
You are required to draft a schedule as follows filling in the columns for each stage up to
10,000 units.
No. of
units
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Fixed cost
€
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
Variable
cost
€
0
14,000
28,000
42,000
56,000
70,000
84,000
98,000
112,000
126,000
140,000
Total cost
€
36,000
50,000
64,000
78,000
92,000
106,000
120,000
134,000
148,000
162,000
176,000
Revenue
€
Profit
€
0
40,000
80,000
120,000
160,000
200,000
240,000
280,000
320,000
360,000
400,000
16,000
42,000
68,000
94,000
120,000
146,000
172,000
198,000
224,000
Loss
€
(36,000)
(10,000)
Question 3: Practicing the Breakeven Analysis Formulas
The following information relates to Infinity Limited
Selling price per unit €55
Variable cost per unit €30
Fixed costs per annum €60,000
The company expects to sell 7,000 units.
Required:
a) Calculate the profit or loss at the budgeted sales level of 7,000 units
b) Calculate the Contribution
c) Calculate the break-even point (in units, in revenue)
d) Calculate the number of units the company will need to sell to earn a profit of €100,000
e) Calculate the margin of safety (in units, in revenue and in %)
f) Calculate the Variable costs to Sales ratio
g) Calculate the Contribution to Sales ratio