Question

su iskunt u vuy utc comporti aru ue lular UNITICI 8.18 The Jones Company normally produces 150,000 units of X per year. Due to an economic downturn, the company has some idle capacity. Product X sells for P15 per unit, The firm's production, marketing, and administration costs at its normal capacity are:

Answer 1

ONLY SOLUTION PART A & B

A	OPERATING INCOME STATEMENT FOR THE YEAR 2017
	PARTICULAR	UNIT	RATE	AMOUNT
	SALES	110000	15	16,50,000.00
	TOTAL - A			16,50,000.00
	EXPENSE
	DIRECT MATERIAL		1	1,10,000.00
	DIRECT LABOUR		2	2,20,000.00
	VARIABLE OVERHEAD		1.5	1,65,000.00
	FIXED OVERHEAD			4,50,000.00
	VARIABLE MARKETING COST		1.05	1,15,500.00
	FIXED MARKETING AND ADMINISTRATIVE COST			2,10,000.00
	TOTAL - B			12,70,500.00
	PROFIT/MARGIN (A-B)			3,79,500.00
	NOTE
	ALL VARIABLE COST CALCULATED AT ACCORDING TO RATE GIVEN
	FIXED COST TAKEN AT FULL, IRRISPECTIVE OF UNITS. BECAUSE IT CAN INCURRED SAME AT EVERY LEVEL.
B	CALCULATION OF BID AMOUNT
	PARTICULARS	UNITS	RATE	AMOUNT
	DIRECT MATERIAL	40000	1	40,000.00
	DIRECT LABOUR		2	80,000.00
	VARIABLE OVERHEAD		1.5	60,000.00
	COST			1,80,000.00
	MARGIN		0.25	10,000.00
	BID AMOUNT			1,90,000.00
	PER UNIT COST			4.75
	NOTE -
	FIXED COST ARE SUNK COST, SO THESE COST CAN'T EFFECT
	VARIAVLE MARKETING COST NOT INCURRED FOR GOVERNMENT
	PROFIT IS 0.25 PER UNIT
	OPERATING INCOME STATEMENT AFTER GOVERNMENT BID
	PARTICULAR	UNIT	RATE	AMOUNT
	SALES - DIRECT	110000	15	16,50,000.00
	GOVERNMENT	40000	4.75	1,90,000.00
	TOTAL - A			18,40,000.00
	EXPENSE
	DIRECT MATERIAL	150000	1	1,50,000.00
	DIRECT LABOUR		2	3,00,000.00
	VARIABLE OVERHEAD		1.5	2,25,000.00
	FIXED OVERHEAD			4,50,000.00
	VARIABLE MARKETING COST			1,15,500.00
	FIXED MARKETING AND ADMINISTRATIVE COST			2,10,000.00
	TOTAL - B			14,50,500.00
	PROFIT/MARGIN (A-B)			3,89,500.00