COSTING WORKSHEET

QUESTION 1
The direct cost of each hotel guest at the Seaview hotel is $15 per night. The room price is $50
per night. The total indirect cost per week is $1 000. On average, 100 guests stay each week
1 What is the contribution per guest per night?

2 Calculate the weekly contribution from 100 guests

3 Calculate the profit made in one week with 100 guest nights.

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QUESTION 2:

Zoe’s Bags (ZB)-Feb March 2024

Zoe’s Bags (ZB) is an online retailer that makes and sells a range of luxury hand-made bags.The
bags are targeted at a niche market and made to customers’ orders. Following a magazine
advertising promotion in January, orders grew by 50% in February to 1400 bags. Zoe and Luis
found it difficult to organise the larger production team. A break-even chart for February is
shown in Fig. 1.1.

Fig. 1.1 ZB’s break-even chart for February

(b) (i) Refer to Fig. 1.1 and other information. Calculate the margin of safety in February.
[3]

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QUESTION 3:
Festival Wear (FW)- May/June 2024/23
FW is a partnership started by two friends, Maz and Jane. FW manufactures and sells high
quality T-shirts at $40 each. Currently the sales team is paid a monthly salary, but Maz is
proposing a new payment method in order to increase sales volume.
 Costs if the new payment method is introduced:
 variable: $12 per T-shirt
 fixed: $182000 per month.
(b) (i) Calculate FW’s break-even output per month if the new payment method is
introduced. [3]

QUESTION 4:
Fizzy Drinks (FD)-May June 2024/21
FD is a private sector business that manufactures an international brand of carbonated drinks.
The change in ingredients led to FD’s products tasting similar to their competitors. FD’s good
brand name and customer loyalty was lost. Currently FD is operating at 60% of maximum
capacity.

(b) (i) Refer to Table 2.1. Calculate FD’s margin of safety in 2023. [3]

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QUESTION 5:

Cobblestone Shoes (CS)- 22/M/J/24

Yazeem is a highly skilled shoemaker. He opened CS in 1975, as a sole trader, to design and
repair shoes. Yazeem’s daughter, Abir, is keen to take over the running of CS. Abir is concerned
about the contribution made on each batch of shoes. Table 2.1 shows some break-even data for a
recent batch of shoes.

(b) (i) Refer to Table 2.1. Calculate the contribution per unit for the recent batch of shoes.
[3]

QUESTION 6:
An electrical assembly firm produces three products. The following information (in $) is
available

Total overhead costs are $10 000. The company currently uses full costing and each product is
allocated a proportion of overheads on the basis of floor space taken up: X = 30%, Y = 50%, Z =
20%.

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1. Calculate the unit contribution of each product.

2. If annual output is all sold, calculate the total contribution of each product

3. Calculate the profit or loss made by each product using full costing at the current
output level

4. Calculate the impact on the total profit of the business if production of Product Z is
stopped. (Remember: Overhead costs allocated to Z will still have to be paid as they
are fixed costs.)

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QUESTION 7:

1 Draw a break-even chart using this data.

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2 Show the break-even point and identify the break-even level of output.

3 From the graph, identify the profit expected at maximum capacity.

4 What is the margin of safety at an output level of 25 000 units?

QUESTION 8:

Location decisions and break-even Book Question PDF Page 708

The following data has been collected about two possible locations for a business:

1 Use the data above to calculate, for each site:

a the break-even level of output

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b the margin of safety

c the total maximum profit assuming all units are sold

QUESTION 9:

Cosmic Cases

Cosmic Cases manufactures a range of suitcases. There are four sizes of case, ranging from a
small vanity case to a large luggage case with wheels for mobility. The latest six-monthly costing
statement (see Table 31.10) and revenue forecasts have just been prepared.

The selling prices are: vanity case $15, small case $18, medium case $20, large case $25.

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b i Calculate the total profit or loss made by each size of case. [3]

QUESTION 10:

Gold Theme Park (GT)- October/November 2023/22

Gold Park was a mine where gold was extracted until 2012. Although there was still some gold
in the mine, the direct costs of extracting it became too high. Kayo is an entrepreneur who
purchased the mine in 2015. She converted the mine into GT, a theme park where customers can
learn about gold mining and have fun. Kayo employs some of the people who previously worked
in the gold mine to work as tour guides in the theme park. Table 1.1 shows some data about GT
over the past three years.

(b) (i) Refer to Table 1.1. Calculate the change in GT’s total costs between 2020 and 2022.
[3]

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QUESTION 11:
BB is a business partnership owned by Sade and Chika. BB produces personalised teddy bears
(toys) for children. Each toy is sold for $50 and has a unit contribution of $6. Last month BB
sold 4000 units with a margin of safety of 120 units.

(b) (i) Calculate BB’s fixed costs last month. [3]

QUESTION 12:

Vegan Burger (VB)

VB is an established vegan burger chain in country X. Its Unique Selling Point (USP) is high
quality, good value vegan meals. Two years ago, primary market research indicated pizza was a
popular fast food in country X. VB added vegan pizza to its menu. Table 2.1 shows the financial
data for producing pizzas.

(b) (i) Refer to Table 2.1. Calculate VB’s breakeven level of output per month per
restaurant. [3]

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QUESTION 13:

Seaside Hotel (SH)- 22/M/J/22

SH is a large hotel located in a tourist area of country H. SH has 120 rooms and employs 42
workers during the peak (busiest) season which is from April to September. To break even, the
hotel must sell 72 rooms per night. The hotel offers good views of the sea and it is very busy in
the peak season when the weather is hot. Table 2.2 shows SH’s sales of rooms.

(b) (i) Refer to Table 2.2 and any other information. Calculate the average margin of safety
from April to September 2021.

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QUESTION 14:

Farm Produce (FP)- May/June 2022/22

FP is a primary sector co-operative made up of six farms in country G. Each farm grows a range
of fruit and vegetables. FP’s customers pay for a box of seasonal fruit and vegetables that is
delivered each week. Data about the different box sizes sold by FP is shown in Table 1.2.

FP is concerned about the profitability of the small box size. It believes it should stop selling this
product.
(b) (i) Refer to Table 1.2. Calculate the profit made by FP in April 2022. [4]

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QUESTION 15:

Pop-up Movies (PM)- October/November/2022/23

PM is a private limited company that was set up five years ago. PM shows movies outdoors at
night. The movies are projected onto a large screen and temporary seating is provided for the
audience.Table 1.1 contains data about some of PM’s previous events.

(b) (i) Refer to Table 1.1. Calculate the break-even number of customers for Venue B. [3]

QUESTION 16:

Friendly Fit (FF)-Oct/Nov 2022/22

FF is a public limited company that owns a popular social media and fitness app. The app was
launched five years ago and now has over three million users worldwide. The app can be
downloaded for free and users can access basic features without paying any money. However, to
access all the features of the app, customers must pay a monthly fee of $10. FF also receives
income from advertising revenue. Table 1.1 shows cost and revenue data for the app for the last
two years.

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(b) (i) Refer to Table 1.1. Calculate FF’s profit margin for the app in 2020. [3]

QUESTION 17:
Rolling Wheels-May/June 2018/33

Kadeem is a keen cyclist and he had the idea that selling bicycles might be profitable. RW’s
major competitive advantage is that it is the only business of its type located very close to a
university. The students and employees of the university are the main customer base
Order from the university
The university’s human resources department has approached Kadeem with a possible order for
80 bicycles for use by employees and students. Kadeem can obtain these bicycles at the short
notice required but is worried that the university has offered a price of only $260 per bicycle.
Table 1 shows information about RW’s existing costs and revenue from selling bicycles.
Kadeem has to decide whether to accept this order.

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2 (a) Refer to Table 1 and line 39. Calculate:

(i) profit margin of bicycle sales for 2017–18

(ii) contribution per unit for the new university order

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QUESTION 18:

Apple Farm (AF)- 24/M/J/21

AF is owned by Desi. Desi is a sole trader. AF specialises in growing and packaging apples
which the business sells to a supermarket chain. AF specialises in one type of apple. The apples
are sold to the supermarket chain in packs of six. AF sells each pack to the supermarkets for $1.
The variable cost of growing, picking and packaging each pack of apples is $0.50. AF has fixed
costs of $5000 per year.

Q) Calculate the break-even output for packs of apples sold by AF. [3]

QUESTION 19:

Gourmet Ices (GI)- 22/F/M/17

The ice cream is handmade in small batches. GI employs five skilled workers who makethe ice
cream. Labour costs account for over half of the direct costs of the business. Tom believes that it
will be necessary to use Computer Aided Manufacturing (CAM) to increase production and
decrease costs so that GI can sell throughout the country (see Table 1).

Q) Refer to Table 1. Calculate the break-even level of production with CAM. [3]

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QUESTION 20:

Security Alarms (SA)- 21/M/J/17

Customers will pay an annual fee to use this new service. Forecast financial information about
the new service is shown in Table 2.

Q) Refer to Table 2. Calculate the forecast margin of safety for the new service. [3]

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QUESTION 21:

Bob’s Furniture (BF)- 22/F/M/20

Joe is considering setting up a small café producing smoothies to supply this potential new
market segment. It would be called ‘Joe’s Smoothies’. This would be possible with a low level of
startup capital. This is important as he has no savings. He created a business plan with estimated
costs (Table 2.1) and estimated demand and average selling price (Table 2.2).

Q) Refer to Table 2.1 and Table 2.2. Calculate the break-even level of sales for JS in the
summer. [3]

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SOLUTIONS:

Zoe’s Bags (ZB) 22/F/M/24

Festival Wear-M/J/2024/23

2(b)(i) Calculate FW’s break-even output per month if the new payment method is
introduced.

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Fizzy Drinks-May june 2024/21

Cobblestone Shoes (CS) 22/M/J/24

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Gold Theme Park (GT)- October/November 2023/22

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Farm Produce (FP)- May/June 2022/22

Pop-up Movies (PM)- October/November/2022/23

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Friendly Fit (FF)-Oct/Nov 2022/22

1(b)(i) Refer to Table 1.1. Calculate FF’s profit margin for the app in 2020. [3]

Rolling Wheels-May/June 2018/33

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