# Using the information provided in the tables above about the annual overheads and usage of each service by the production and other service departments, and if the overheads allocated to the three service departments are reallocated to the three production departments based on usage, reallocate the service overheads to determine the total overheads after reallocation fo

(B2) Using the information provided in the tables above about the annual overheads and
usage of each service by the production and other service departments, and if the overheads
allocated to the three service departments are reallocated to the three production
departments based on usage, reallocate the service overheads to determine the total
overheads after reallocation for each of the three production departments.

(22 marks)

(Task 1 Total – 30 Marks)

Sheet 3 of 4
Module Code: ACFI1203

DKM Leicester Limited also produces special ergonomic student tables in one of their
production hubs located in Manchester. The forecasts for the year 2022 are that fixed costs
will be £22,000,000, variable costs per student table will be £600, and sales price will be
£770 per Student table. Sales for the year is forecasted at 850,000 Student tables

(A) How many Student tables will have to be produced and sold to break-even in the
Manchester production hub? (6 marks)

(B) Calculate the company’s margin of safety as a percentage of sales (8 marks)

(C)The Managing Director of the Manchester production facility has declared that the profit
target for the year 2022 is to be £90,000,000. How many Student tables does the facility
need to make and sell to achieve that target profit? (8 marks)

(D)The Directors of DKM Leicester Limited were advised by the company’s external
accountant that for the company to be successful, they have to produce beyond the break-
even point. However, the directors do not understand what the accountant meant by the
term ‘Break Even Point’. Provide a brief note for the directors that explains what the ‘Break
Even Point’ means (Maximum 100 words) (8 marks).

(Task 2 Total – 30 Marks)

Using the information provided in the tables above about the annual overheads and usage of each service by the production and other service departments, and if the overheads allocated to the three service departments are reallocated to the three production departments based on usage, reallocate the service overheads to determine the total overheads after reallocation fo
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