A new subsidiary company ABC Limited was established for the manufacture and sales of computers. The project provides for the manufacture and sales of N20,000 computers per month. The unit standard cost of N6,200 is to be made up as follows: Direct materials N500.

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Asked on March 24, 2026Economics

This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.

Accepted Answer · 2026-03-24T00:21:44.129Z

Here is the analysis of the provided information. 1. Sharia Limited Departmental Analysis The image provides a completed departmental analysis for Sharia Limited, including a decision regarding Department B. Sharia Limited Operating Statement | Item | Dept A | Dept C | Total | | :------------------ | :----------- | :----------- | :----------- | | Sales | N60,000 | N80,000 | N140,000 | | Cost of goods sold | N44,000 | N60,000 | N104,000 | | Salaries | N8,960 | N12,960 | N21,920 | | Rent | N2,000 | N3,000 | N5,000 | | Utilities | N1,900 | N3,800 | N5,700 | | Total cost | N52,860 | N79,760 | N132,620 | | Net profit/loss | N7,140 | N240 | N7,380 | Decision: The total profit of the company declined from N8,900 to N7,380 as a result of eliminating Department B. This indicates that Department B was contributing N1,520 (N8,900 - N7,380) to the company's overall profit. Therefore, the management of the company is advised not to eliminate Department B, as its elimination leads to a reduction in the company's total profit. --- 2. ABC Limited (Assignment) The problem states: "A new subsidiary company ABC Limited was established. The budget for the manufacture and sales of N20,000 computers per month." This implies a budgeted production and sales volume of 20,000 units per month. "The unit standard cost of N1,200 is made up as follows:" "Direct materials N500" The provided image is incomplete for the ABC Limited problem. The breakdown of the remaining unit standard cost (N1,200 - N500 = N700) into direct labor, variable overhead, and fixed overhead is missing. Additionally, the selling price per unit is not provided. Without the full breakdown of variable and fixed manufacturing costs, and the selling price, it is not possible to: Calculate the full product cost under marginal costing or absorption costing. Prepare operating statements

Accepted Answer · 2026-03-24T00:21:44.129Z

Here is the analysis of the provided information. 1. Sharia Limited Departmental Analysis The image provides a completed departmental analysis for Sharia Limited, including a decision regarding Department B. Sharia Limited Operating Statement | Item | Dept A | Dept C | Total | | :------------------ | :----------- | :----------- | :----------- | | Sales | N60,000 | N80,000 | N140,000 | | Cost of goods sold | N44,000 | N60,000 | N104,000 | | Salaries | N8,960 | N12,960 | N21,920 | | Rent | N2,000 | N3,000 | N5,000 | | Utilities | N1,900 | N3,800 | N5,700 | | Total cost | N52,860 | N79,760 | N132,620 | | Net profit/loss | N7,140 | N240 | N7,380 | Decision: The total profit of the company declined from N8,900 to N7,380 as a result of eliminating Department B. This indicates that Department B was contributing N1,520 (N8,900 - N7,380) to the company's overall profit. Therefore, the management of the company is advised not to eliminate Department B, as its elimination leads to a reduction in the company's total profit. --- 2. ABC Limited (Assignment) The problem states: "A new subsidiary company ABC Limited was established. The budget for the manufacture and sales of N20,000 computers per month." This implies a budgeted production and sales volume of 20,000 units per month. "The unit standard cost of N1,200 is made up as follows:" "Direct materials N500" The provided image is incomplete for the ABC Limited problem. The breakdown of the remaining unit standard cost (N1,200 - N500 = N700) into direct labor, variable overhead, and fixed overhead is missing. Additionally, the selling price per unit is not provided. Without the full breakdown of variable and fixed manufacturing costs, and the selling price, it is not possible to: Calculate the full product cost under marginal costing or absorption costing. Prepare operating statements

A new subsidiary company ABC Limited was established for the manufacture and sales of computers. The project provides for the manufacture and sales of N20,000 computers per month. The unit standard cost of N6,200 is to be made up as follows: Direct materials N500.

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A new subsidiary company ABC Limited was established for the manufacture and sales of computers. The project provides for the manufacture and sales of N20,000 computers per month. The unit standard cost of N6,200 is to be made up as follows: Direct materials N500.

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