Relevant costs marginal costing, and short-term decision making
. Lamp Lighting produces lamps from bought in parts. The variable cost of each lamp comprises of direct materials of £6.00, labour costs of £10.00 and variable overheads of £2.00. Lamp Lighting has fixed overheads of £180,000 and sells its lamps for £30 each. Current sales are 20,000 lamps per annum and the break-even point is 15,000 lamps. How many lamps would Lamp Lighting have to sell to make a target profit of £135,000?

. Pileitup produces shelving units. The variable cost of each shelving unit comprises of direct materials of £30.00, direct labour of £10.00, packaging costs of £7.00 and variable overheads of £3.00. Pileitup has fixed overheads of £300,000 and sells its shelving units for £75 each. Current sales are 25,000 shelving units per annum and the break-even point is 12,000 shelving units. How many shelving units would Pileitup have to sell to make a target profit of £270,000?

. Flycostcapped operates aircraft from various airports in the UK to various destinations in Europe. The company wishes to introduce contribution and break-even analysis to the accounting function to determine the profitability of each flight and has asked for your help. The company has chosen the flight from Birmingham to Barcelona for you to demonstrate how break-even analysis works. Flycostcapped offers one way flights to Barcelona for £50 and the directors expect average additional revenue from each passenger to be £55 from luggage charges, refreshments and credit card charges. The fixed cost of each flight from Birmingham to Barcelona is £7,500 and the variable cost per passenger is £5 per flight. The aircraft used on the Birmingham - Barcelona route has a capacity of 150 seats and the average number of passengers on each Birmingham - Barcelona flight is 100. The break-even point in number of passengers on Birmingham - Barcelona flights is 75. How many seats would Flycostcapped have to sell to make a profit on each Birmingham - Barcelona flight of £4,500?