QUESTIONS 389
Co.’s total operating profit if the special order were accepted in addition to the
planned sales at full price?
8.7 Yorkstar plans for a profit of £40,000 and expects to sell 20,000 units. Variable
cost is £8 per unit and total fixed costs are £100,000. Calculate the selling price
per unit.
8.8 Jasper’s IT consultancy has fixed costs of £450,000 per annum. There are
10,000 hours billed on average per annum. If variable costs are £35 per hour,
calculate the breakeven charge rate per hour.
8.9 Hong Long Ltd has a product that is sold for £75, variable costs are £30 and
fixed costs are £1,000 per month. Calculate how many products need to be sold to
obtain a profit of £10,000 per annum.
8.10 John Richards PLC has a cost per unit of £10 and an annual volume of sales
of 18,000 units. If a £200,000 investment is required and the target rate of return is
12%, calculate the target mark-up per unit.
8.11 Victory Sales Co. predicts its selling price to be £20 per unit. Estimated costs
are direct materials £8 per unit, direct labour £5 per unit and fixed overhead £7,000.
Calculate the number of units to be sold to generate a profit of £5,000.
8.12 Luffer Enterprises estimates the following demand for its services at
different selling prices. All demand is within Luffer’s relevant range. Variable
costs are £15 per unit and fixed costs are £10,000.
Price (£) Quantity
26 1,075
27 1,000
28 925
29 850
30 775Calculate the level of sales that will generate the highest profit.
8.13 Godfrey Consultancy adopts a cost-plus pricing system for its services and
applies a target rate of return of 25% on an investment of £750,000. Its labour
costs are £25 per hour and other variable costs are £4 per hour. The consultancy
anticipates charging 20,000 hours per year to clients and has fixed overheads
of £250,000.
Calculate Godfrey’s target selling price per hour.
8.14 The marketing department of Giggo Hotels has estimated the number of
hotel rooms (it has 120) that could be sold at different price levels. This information