Reference no: EM132878348

Unit 7 Management Accounting - BTEC level 3 Extended diploma Business

Learning aim 1: Understand how production costs are determined and used to calculate prices

Learning aim 2: Be able to use brook-oven analysis

Learning aim 3: Be able to use appropriate statistical information to review and predict business performance

Learning aim 4: Be able to use budgetary techniques.

Assignment - Production and breakeven

Zebra accountancy is a dedicated service for taxation and business services and have many clients that they do work for. You have been asked by the accountant to do some computations for one of the clients "Zoo manufacturing" who specialises in making a hand crafted cco tent caned "'tent". The client has given you some estimates and you need to show them the outcomes based on this information below:

Task 1: Production was set at 40 units per month

Question

1. Using Marginal and Absorption costing prepare Cost and Income statements manufacturing for the month.

You will need to reflect the cost per unit for each shed, using both methods of costing. (Explain how this done done)

2. Set a profit mark-up of 75% to establish the selling price using Marginal and Absorption costing showing this on the Income
statement.

(Explain how this was done)

Task 2:

Breakeven analysis.

Zoo manufacturing is looking into making a new environmentally friendly door to trap more heat exiting the coo tent. They have provided the following information and asked for your help by answering the questions below:

The new product has estimated fixed costs of £213500. Variable costs per door of £33.00 Selling price per door of £101.00

Questions:

A) What is the breakeven point in units?

B) What is the breakeven point in sates value?

C) Plot this information on a break even chart using excel.

D) How many doors will need to be sold to make a £31,000 profit?

E) If there is a £31,000 profit what is the margin of safety in units?

F) How many doors would need to be sold to breakeven if there were advertising costs of £10,500 and a required profit of £31.000?

Using the information above reflect and common) on the impact of the breakeveyi urdts_agd_yalue if the selling price was dropped to:

G) £70 and

H) Increase to £120.

Show the impact on the business PROFITABILITY if the sales in units was to:

H) Drop by 20% approximately
I) Increase by 25%

J) Comment on the strenglhs and weaknesses of using Break-even analysis as a tool in decision making. to help with budgeting for a business.

Attachment:- Management Accounting.rar