Reference no: EM133074616
Question - Part A - Ryde Metal Company manufactures recyclable soft drinks cans and incurs the following costs as part of its operations.
Cost Items Amount $
Salary of factory supervisor 18,000
Factory utility cost 9,400
Aluminium used 67,500
Commissions paid to sales personnel 11,800
Wages for factory labour 35,600
Insurance on factory equipment 3,500
Depreciation on factory equipment 2,700
Maintenance cost of delivery vehicles 6,300
Advertising cost to promote the product 10,000
Rental for factory space 13,000
Required - Calculate the a) Prime cost b) Conversion cost c) Period cost d) Product cost.
Part B - Yummy n' Easy is a famous fresh ready-made meals business that operates in many suburbs in New South Wales. The selling price of a ready-made meal is $10. It is estimated that the company will incur a variable cost of $168,000 to make and deliver 24,000 meals (estimated production and sales). The company's estimated fixed cost is $51,000.
Required - Calculate the following (including calculations)
a) What is Yummy n' Easy's contribution margin ratio?
b) Calculate Yummy n' Easy's break-even point in units (meals).
c) Calculate Yummy n' Easy's break-even point in sales dollars.
d) (i) What is Yummy n' Easy's margin of safety ratio? (Round off the answer to the nearest 2 decimal places).
(ii) How can managers of Yummy n' Easy use this margin of safety ratio information to manage the profitability of the business?
e) How many meals must the company sell to earn a target profit of $90000?
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