Page 23 - Microsoft Word - 00 Prelims.docx
P. 23
A revision of F2 topics
Example 2
A company manufactures only one product called XY. The following
information relates to the product:
Selling price per unit $20
Direct material cost per unit $(6)
Direct labour cost per unit $(2)
Variable overhead cost per unit $(4)
Contribution per unit $8
Fixed costs for the period are $25,000.
Level of activity 2,500 5,000 7,500 10,000
units units units units
Revenue 50,000 100,000 150,000 200,000
Variable costs 30,000 60,000 90,000 120,000
Total contribution 20,000 40,000 60,000 80,000
Fixed costs 25,000 25,000 25,000 25,000
Total profit/loss (5,000) 15,000 35,000 55,000
Contribution per unit $8 $8 $8 $8
Profit/(loss) per unit $(2) $3 $4.67 $5.50
17
