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MC Question 3

P Co makes two products, P1 and P2. The budgeted details for each product are as follows:
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
Budgeted production and sales for the year ended 30 November 20X5 are:
Product P1 10,000 units
Product P2 12,500 units
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.

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