Multi-product profit-volume graph JK Limited has prepared a budget for the next twelve months when it intends to make and sell four products, details of which are shown below:

Budgeted fixed costs are £240 000 per annum and total assets employed are £570 000.
You are required

(a) to calculate the total contribution earned by each product and their combined total contributions; (2 marks)

(b) to plot the data of your answer to

(a) above in the form of a contribution to sales graph (sometimes referred to as a profit-volume graph) on the graph paper provided, (6 marks)

(c) to explain your graph to management, to comment on the results shown and to state the break-even point; (4 marks)

(d) to describe briefly three ways in which the overall contribution to sales ratio could be improved.

Transcribed Image Text:

Product Sales in units (thousands) Selling Variable price cost per unit per unit () () J 10 KLM 10 50 20 2049 14.00 8.00 4.20 10 7.00