Question 1 - The Nostalgic Lamp Company
The Nostalgic Lamp Company manufactures three types of lamp: Mr T., Gloria Gaynor and Donny Osmond models. Production of the lamps are organised into three costs centres. The profit and loss account for the year just ended shows that the Donny Osmond makes a loss and it has been suggested that they may be discontinued.
£000s Mr T Gloria Gaynor Donny Osmond
Sales 500 350 650
Direct Materials 150 80 250
Direct Labour 100 100 250
Variable overheads50 40 60
Fixed overheads 100 80 110
Totals costs 400 300 670
Profit/loss 100 50 (20)
Questions
1. Define the term ‘cost centre.’ (2 marks)
2. What are the pros and cons of using costs centres in dealing with costs? (4 marks)
3. From the above schedule of costs and profits:-
a) Calculate the variable cost of producing the each of the three lamps (3 marks)
b) Calculate the contribution of each of the three lamps (3 marks)
c) Calculate the total fixed costs (1 mark)
d) Calculate the overall level of profits. (2 marks)
4. The Donny Osmond lamp is discontinued. Evaluate the impact on the company’s overall profits
answer:
1.cost centrer:a department or section of an organisation to which specific costs can be allocated
2.pros:
(1).team spirit is easier to generate among 20 people than among 2000
(2).by identifying the costs generated by each department,the firm is better able to decisions(3).bucause the costs can be allocated,so it`s easy to collect the money.
cons:
1.maybe after a long time there will be some impacts.
2.YOU should give each individual benefit,maybe some argument appears,bucause of personal
Diseconomies of scale
-
Diseconomies of scale occur when a business grows so large that the costs
per unit increase. As output rises, it is not inevitable that unit costs
will fa...
7 years ago
6 comments:
1.cost centrer:a department or section of an organisation to which specific costs can be allocated
2.pros:
1.team spirit is easier to generate among 20 people than among 2000
2.by identifying the costs generated by each department,the firm is better able to decisions
3.bucause the costs can be allocated,so it`s easy to collect the money.
cons:
1.maybe after a long time there will be some impacts.
2.YOU should give each individual benefit,maybe some argument appears,bucause of personal benefit!
Put the answer in your blog - not the comments!
I CAN DO QUESTION3!!!!!
even I don`t know how to calculate
please give me some help!
Ask other people - you should do all the questions...
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