Part C (Southland plc)
Total for Part C(40%)
Southland plc is specialised in producing and selling of washing machines. In 2017, the manufacturing cost per unit included:
Direct labour (30 minutes per unit)90/hour
Variable manufacturing overhead30
Variable selling expenses50
Variable administrative expenses10
Fixed costs for the year ended 31 December 2017 were:
Fixed selling and distribution1,700
The company produced and sold 275,000 units at £400 per unit.
In 2018, management has decided to increase the selling price by 15% and to maintain the same contribution margin ratio as last year. This increase in price is to meet an increase of £2,440,000 in fixed costs in 2018. The company has produced and sold the same quantity in 2018 as last year.
Total for part C: 25%
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