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MC Question 3
P Co makes two products, P1 and P2. The budgeted details for each product are as follows:
Budgeted production and sales for the year ended 30 November 20X5 are:
The fixed overhead costs included in P1 relate to apportionment of general overhead costs only. However, P2 also included specific fixed overheads totalling $2,500.
| P1 | P2 | |
|---|---|---|
| $ | $ | |
| Selling price | 10·00 | 8·00 |
| Cost per unit: | ||
| Direct materials | 3·50 | 4·00 |
| Direct labour | 1·50 | 1·00 |
| Variable overhead | 0·60 | 0·40 |
| Fixed overhead | 1·20 | 1·00 |
| Profit per unit | 3·20 | 1·60 |
| Product P1 | 10,000 units |
| Product P2 | 12,500 units |
If only product P1 were to be made, how many units (to the nearest whole unit) would need to be sold in order to achieve a profit of $60,000 each year?
A. 25,625 units
B. 19,205 units
C. 18,636 units
D. 26,406 units