Compare and comment on the break-even point

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Reference no: EM131610049 , Length: 6

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

Reference no: EM131610049

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