Page 298 - P1 Integrated Workbook STUDENT 2018
P. 298
Subject P1: Management Accounting
2.8 A
The ratios provided can be used to determine the make-up of surveyors on
each service:
Junior Senior
surveyors surveyors
P ratio 1 1
Total staff hours per job 5 5
C Ratio 4 1
Total staff hours per job 8 2
Therefore, in total, 5 junior surveyor hours are needed for industrial premise
surveys (P) and 8 are needed for commercial premise surveys. This makes the
constraint equation:
5P + 8C ≤ 50,000
2.9 B
Total budgeted contribution = (12,000 × $30) + (36,000 × $50) = $2,160,000
Total budgeted sales = (12,000 × $40) + (36,000 × $60) = $2,640,000
Weighted average contribution to sales ratio = $2,160,000/$2,640,000 = 81.8%
Break-even point = $2,000,000/0.818 = $2,444,988
Margin of safety = $2,640,000 – $2,444,988 = $195,012
2.10 The answer is $4,400.
The cost of the first 20 hours will be the normal cost per hour ($40) and have a
total cost for these hours of $800.
For the remaining 60 hours, these must be taken by reducing the work on the
other project. The labour cost is not relevant as it will either be paid in the
existing project or in the new project. Only the lost revenue needs to be
considered. The other project requires 4 hours of labour and therefore the
revenue generated is $60 per hour. This is the relevant cost of using the labour
in the new project. For 60 hours this gives a total cost for this scarce labour of
$3,600.
The total relevant cost to the project = $800 + $3,600 = $4,400.
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