Reference no: EM132979416

Question - Cello Company manufactures and sells in excess of 200,000 solid carbide point tip pens a year. During the year ending April 2021, a new manager, P K Shah, oversaw the operations. Her contract with Cello Company was only for one year and her salary was to be £200,000 plus 10% of Cello Company's net income under absorption costing. For the year, the company had a net income of £800,000 using absorption costing and £760,000 using variable costing. The fixed manufacturing overhead cost applied per unit was £0.50. There was no beginning stock. During the year, Shah proudly reported that 220,500 units were produced, and she indicated that her performance had been exceptional, and her remuneration was welldeserved. She left Cello Company in May 2021.

REQUIRED -

(a) How many units were sold during the year? Show your calculations.

(b) Do you think Shah's performance was exceptional during the year? Explain fully. Show your calculations.