Question

( v ) The minimum price at which a pie could be sold to ( vi ) The minimum price at which a pie could be sold to nalysis of Short-Term Decisions Scenario #1 The following information pertains to Problems #3 and #4. Brackley Co. makes fruit pies. The income statement for last year was as follows: Brackley Co. Income Statement Last Year Sales revenue (3 million pies @ $3) STS $9,000,000 Direct materials $1,500,000 Direct labour 1,500,000 Production overhead 3,000,000 6,000,000 Gross margin $3,000,000 Selling & distribution expense $1,200,000 300,000 1,500,000 Administrative expense Operating income $1,500,000 Other information on costs is as follows: • Direct materials and direct labour are 100% variable cost. • Production overhead is 50% variable cost and 50% fixed cost. Selling expense is 75% variable cost and 25% fixed cost. • Administrative expense is all fixed cost. 3. (a) Given the information, calculate the following: (1) The variable manufacturing cost per pie made (ii) The total variable cost per pie sold (ii) The full manufacturing cost per pie made (iv) The full cost per pie sold cover its marginal cost cover its full cost. the price at (h) soumi

Q 3
both a and B parts

Answer 1

Working notes: Fixed % Direct material Direct labour Production overhead Selling & distribution expense Administrative expense Total Variable % 100% 100% 50% 75% Variable Cost $1,500,000 $1,500,000 $1,500,000 $900,000 Fixed Total Cost Cost $1,500,000 $1,500,000 $1,500,000 $3,000,000 $300,000 $1,200,000 $300,000 $300,000 $2,100,000 $7,500,000 50% 25% 100% $5,400,000 3 a) ) Variable manufacturing cost per pie $1.50 Direct material Direct labour Production overhead-Variable Total variable manufacturing cost Total pies Variable manufacturing cost per pie $1,500,000 $1,500,000 $1,500,000 $4,500,000 a 3,000,000 b $1.50 a/b Total Variable cost per pie sold $1.80 Direct material Direct labour Production overhead Selling & distribution expense Total variable cost Total pies Total Variable cost per pie sold $1,500,000 $1,500,000 $1,500,000 $900,000 $5,400,000 a 3,000,000 b $1.80 a/b iii) Full manufacturing cost per pie $2.00 Direct material Direct labour Production overhead Total manufacturing cost Total pies Full manufacturing cost per pie $1,500,000 $1,500,000 $3,000,000 $6,000,000 a 3,000,000 b $2.00 a/b iv) Full cost per pie sold $2.50 Direct material Direct labour Production overhead Selling & distribution expense Administrative expense Total cost Total pies Full cost per pie sold $1,500,000 $1,500,000 $3,000,000 $1,200,000 $300,000 $7,500,000 3,000,000 $2.50 v) $1.80 Minimum price at which pie can be sold to cover its marginal cost (Variable cost per pie) $2.50 vi) Minimum price at which pie can be sold to cover its full cost (full cost per pie) b) Price per unit $3.25 $2.50 Full cost per pie sold Profit per unit Price per unit $0.75 $2,250,000/3,000,000 $3.25