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AnswersFundamentals Level Skills Module, Paper F5Performance ManagementDecember 2014 AnswersSection A1ADivision A: Profit = $14 4m x 30% = $4 32mImputed interest charge = $32 6m x 10% = $3 26mResidual income = $1 06mDivision B: Profit = 8 8m x 24% = $2 112mImputed interest charge = $22 2m x 10% = $2 22mResidual income = $(0 108)m2D3A4B5CNumber of units required to make target profit = fixed costs + target profit/contribution per unit of costs = ($1 2 x 10,000) + ($1 x 12,500) $2,500 = $22, per unit of P = $3 20 + $1 20 = $4 40.($22,000 + $60,000)/$4 40 = 18,636 price per unit$160$214$100$140Raw material cost$24$56$22$40Direct labour cost at $11 per hour$66$88$33$22Variable overhead cost$24$18$24$18Contribution per unit$46$52$21$60 Direct labour hours per unit6832Contribution per labour hour$7 67$6 50$7$30Rank2431Normal monthly hours (total units x hours per unit) 1,8001,000720800If the strike goes ah

10 B By definition, a shadow price is the amount by which contribution will increase if an extra kg of material becomes available. 20 x $2·80 = $56.

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