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In: Finance
The company produces one type of product. Its production volumes per year are 24 thousand. pcs....
The company produces one type of product. Its production volumes per year are 24 thousand. pcs. The production department employs four workers, who are paid 6 euros for each product produced. Each worker produces 6 thousand. pcs. products per year. The annual salary of the administration staff consists of 15,000 Eur. The raw materials required for the production of one product cost 5 Eur., And additional materials for one product - 1 Eur. The company uses machines in the production process, which cost 8,000 Eur and will be used for 5 years, and other equipment, which cost 900 Eur and will be used for 5 years. The company pays EUR 2,000 per year for the maintenance and management of the premises. Communication and other services cost the company 1700 Eur per year. The company plans to receive 30 percent. profit for each unit of product sold. Depreciation of fixed assets is calculated using the straight-line method.
Calculate the commercial cost, price (excluding VAT) and gross profit of one product.
Solutions
Expert Solution
| Particular | Pistons | |
| Units = | 24000 | |
| Per Unit | Total | |
| Material | € 5.0000 | € 120,000.00 |
| Additional material | € 1.0000 | € 24,000.00 |
| Worker cost | € 6.0000 | € 144,000.00 |
| Factory overhead | € 0.8533 | € 20,480.00 |
| Total Cost | € 12.8533 | € 308,480.00 |
| Particular | Amount |
| Maintainance of Premises | € 2,000.00 |
| Comunication cost | € 1,700.00 |
| Administration cost | € 15,000.00 |
| Depreciation on machine | € 1,600.00 |
| (8000 Euro / 5) | |
| Depreciation on other equipment | € 180.00 |
| (900 Euro / 5) | |
| Total | € 20,480.00 |
| Unit | 24000 |
| Cost per unit | € 0.8533 |
We assume that profit is 'X' and profit require 30% means profit = 0.30X
| Particular | Pistons | |
| Units = | 24000 | |
| Per Unit | Total | |
| Material | € 5.0000 | € 120,000.00 |
| Additional material | € 1.0000 | € 24,000.00 |
| Worker cost | € 6.0000 | € 144,000.00 |
| Factory overhead | € 0.8533 | € 20,480.00 |
| Total Cost | € 12.8533 | € 308,480.00 |
| Profit | 0.30X | 0.30X |
| Sales | X | X |
So,
Sales = Total cost + Profit
X = € 12.85 + 0.30X
X - 0.30X = €12.85
0.70X = €12.85
X = €18.3619 or say €18.36 so profit = 0.30X so 0.30 x €18.36 = €5.508
or
Sales = Total Cost +Profit
X = €308,480 + 0.30X
X = €440,685.71 so profit = 0.30X sp 0.30 x €440,685.71 = €132,205.71
| Particular | Pistons | |
| Units = | 24000 | |
| Per Unit | Total | |
| Material | € 5.0000 | € 120,000 |
| Additional material | € 1.0000 | € 24,000 |
| Worker cost | € 6.0000 | € 144,000 |
| Factory overhead | € 0.8533 | € 20,480 |
| Total Cost | € 12.8533 | € 308,480 |
| Profit | € 5.5080 | € 132,192 |
| Sales | € 18.36 | € 440,672 |
Commercial cost = €12.8533 per unit or €308,480 for 24000 units
Price (excluding vat)= €18.36 per unit or €440,672 for 24000 units
Gross profit = €5.5080 per unit or €132,192 for 24000 units
If any help require for this question please comment, I will help you.
jeff jeffy answered 1 year agoRelated Solutions
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