Question MA2.50: A company provides a shirt laundering service. The standard ...
A company provides a shirt laundering service. The standard cost and revenue for laundering one batch of shirts is as follows.
£ per batch
Selling price 23
Materials cost (detergent, starch, etc.) 3
Labour cost 14
Variable overhead cost 1
Fixed costs incurred each month amount to £15,900.
The number of batches of shirts to be laundered to earn a profit of £4,300 per month is \boxed{ \ \ \ \ \ \ \ \ \ \ \ } batches
The number of batches of shirts to be laundered to earn a profit of £4,300 per month is 4,040 batches.
Workings:
Contribution per batch of shirts = £(23 – 3 – 14 – 1) = £5
Number of batches to achieve required profit = £(15,900 + 4,300)/£5 = 4,040 batches