The Euro Company is a wholesaler who sells its products to retailers throughout Europe. Euro’s headquarters is in Brussels. The company has adopted a regional structure with each region consisting of 3-5 sales territories. Each region has its own regional office and a warehouse which distributes the goods directly to the customers. Each sales territory also has an office where the marketing staff are located. […]

Adapting the obsolete materials for use as a substitute for a sub-assembly that is regularly used within the firm. Details of the extra work and materials required are as follows: Material C 1000 units Direct labour: 4000 hours unskilled 1000 hours semi-skilled 4000 hours highly skilled 9000 hours 1200 units of the sub-assembly are regularly used per quarter, at a cost of £900 per unit. […]

A market gardener is planning his production for next season, and he has asked you as a cost accountant, to recommend the optimal mix of vegetable production for the coming year. He has given .yeu the following data relating to the current year. Potatoes Turnips Parsnips Carrots Area occupied (acres) 25 20 30 25 Yield per acre (tonnes) 10 8 9 12 Selling price per […]

Z Limited manufactures three products, the selling price and cost details of which are given below: Product Product Product X Y Z (£) (£) (£) Selling price per unit 75 95 95 Costs per unit: Direct materials 10 5 15 (£5 /kg) Direct labour 16 24 20 (£4/hour) Variable overhead 8 12 10 Fixed overhead 24 36 30 In a period when direct materials are […]

Your company regularly uses material X and currently has in stock 600 kg, for which it paid £1500 two weeks ago. It this were to be sold as raw material it could be sold today for £2.00 per kg. You are aware that the material can be bought on the open market for £3.25 per kg, but it must be purchased in quantities of 1000 […]

BB Limited makes three componerits: S, T and U. The following costs have been recorded: Component Component Component S T U UNIT COST UNIT COST UNIT COST (£) (£) (£) Variable cost 2.50 8.00 5.00 Fixed cost 2.00 8.30 3.75 Total cost 4.50 16.30 8.75 Another company has offered to supply the components to BB Limited at the following prices: Component Component Component S T […]

M plc makes two products – M1 and M2 -budgeted details of which are as follows: Ml M2 (£) (£) Selling price 10.00 8.00 Costs per unit: Direct materials 2.50 3.00 Direct labour 1.50 1.00 Variable overhead 0.60 0.40 Fixed overhead 1.20 1.00 Profit per unit 4.20 2.60 Budgeted production and sales for the year ended 31 December are: Product M1 10 000 units Product […]

A company is considering accepting a one-year contract which will require four skilled employees. The four skilled employees could be recruited on a one-year contract at a cost of £40 000, per employee. The employees would be supervised by an existing manager who earns £60 000 per annum. It is expected that super-vision of the contract would take 10% of the manager’s time. Instead of […]

Changes in sales mix XYZ Ltd produces two products and the following budget applies for 2001: Product X Product Y (£) (£) Selling price 6 12 Variable costs 2 4 Contribution margin 4 8 Fixed costs apportioned £100000 £200000 Units sold 70000 30000 You are required to calculate the break-even points for each product and the company as a whole and comment on your findings.

Make or buy decision The management of Springer plc is considering next year’s production and purchase budgets. One of the components produced by the company, which is incorporated into another All product before being sold, has a budgeted manufacturing cost as follows: (£) Direct material 14 Direct labour (4 hours at £3 per hour) 12 Variable overhead (4 hours at £2 per hour) 8 Fixed […]