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QUESTION:
Determine the quantity of RC1 and Rc2 that Breeden needs to sell to achieve
annual target profit of $210,000.
SOLUTION:
RC1 RC2
Produce and
10,000 units 5,000 units
sell per month
Ratio 2 1
Variable direct
Total Per Unit Total Per Unit
cost
32,000
55,000 5,000
10,000
Parts $55,000 $32,000
$ 5.50 $ 6.40
21,000
35,000
5,000
10,000
Direct labor $35,000 $21,000
$ 4.20
$ 3.50
TOTAL
$90,000 $53,000
DIRECT
53,000
90,000
TOTAL 5,000
10,000
DIRECT PER
UNIT
$ 10.6
$ 9.00
$ 14,000 $ 7,000
Variable 10,000 5,000
overhead per
unit
$ 1.40 $ 1.40
TOTAL
VARIABLE $ 9.00+ $ 1.40=$ 10.40 $ 10.60+ $ 1.40=$ 12.00
COST PER
UNIT
CONTRIBUTI
ON PER $ 20$ 10.40=$ 9.60 $ 23$ 12=$ 11
UNIT
(SP-VC)
2. Fixed cost
Manufacturing cost $ $
Occupancy (utilities, rent,
15,000
maintenance )
Equipment maintenance 17,000
RC1 RC2
Ratio 2 1
$ 19.20+$ 11.00
TOTAL
$ 30.20
RC1 RC2
Target profit $ 210,000 12 month=$ 17,500
each month
NOOR NADIAH BT ROSLI (821874)
Ratio 2 1
( $ 131,000+$
$ 30.20
17,500
)x 2 ( $ 131,000+$
$ 30.20
17,500
)x 2
9834 unit 4917 unit