Kahlenberg Ltd. manufactures a product that has a fixed cost of € 800,000.00 and a variable cost 0f € 200.00 per unit. The business has making 20,000 units and selling them for € 400.00 per unit. There is excess capacity in the plant and there is an additional offer to sell 1,000 units for € 240.00 per unit.

What should Kahlenberg Ltd. do?

Kahlenberg Ltd. has fixed costs of € 600,000.00. A product that sells for € 50.00 is a candidate for being dropped from the product mix. The variable cost of the product is € 40.00 per unit. The company estimates that all of the variable cost avoidable and 10 percent of the fixed costs are avoidable if the business drops the product from its product mix. If it continues to provide the product, sales is expected to be 5,000 units.

Should Kahlenberg Ltd. drop the product?

Mark the correct statements (Hint: marginal costs = variable costs)

Protect Ltd a small tailor produces face masks. The monthly fixed costs for rent, insurance, maintainance, cleaning etc. is budgeted to EUR 10509.

Protect Ltd sells its masks for EUR 25 per unit.

The variable cost per unit (material) is budgeted to EUR 12 per unit.

The expected volume of sales is: 20273 units

Required: Calculate the margin of safety.

Protect Ltd a small tailor produces face masks. The monthly fixed costs for rent, insurance, maintainance, cleaning etc. is budgeted to EUR 11144.

Protect Ltd sells its masks for EUR 23 per unit.

The variable cost per unit (material) is budgeted to EUR 16 per unit.

Management aims for a profit of EUR 7446.

Required: Calculate the required volume of activity to generate the target profit.

Hint: round to whole-numbers.

Protect Ltd a small tailor produces face masks. The monthly fixed costs for rent, insurance, maintainance, cleaning etc. is budgeted to EUR 15489.

Protect Ltd sells its masks for EUR 26 per unit.

The variable cost per unit (material) is budgeted to EUR 15 per unit. 

Required: Calculate break-even point (BEP).

The bakery Soft&Sweet Ltd collected data relating to its electricity cost and volume of activity over the last two years and found the following:

Year 20X1: Volume of activity 10592 units; Total electricity cost in EUR: 1689

Year20X2: Volume of activity 14627 units; Total electricity cost in EUR: 3412

Expected Volume of activity for Year 20X3: 18998

Required: Calculate the expected variable cost for 20X3.

Which of the following costs are typically variable?

Mark the correct statements.

A company needs 1410 units of material A1 to fulfill an order. The following information is available for material A1:

Quantity held in stock: 497

Historic cost: 9

Sales value: 8.2

Replacement cost: 13

Material A1 is the result of an overbuying in the past and there is no other use for this material.

What is the relevant cost for material A1 to fulfill the order? Format: 10000.00