1. Accounts For You Ltd provides business software for small companies. On 1st July 2020, the company is planning to release two new accounting software packages. The price of each package includes one technical visit by Accounts For You Ltd staff, to customise the product and provide training. Details of the packages are as follows: Count on us is designed for very small businesses. It is compatible with company law and tax regulation requirements. It provides basic, easy to understand weekly analyses and final year accounts. Know it all is aimed at larger small businesses. Compatibility features are the same as Count on us and the package allows for greater complexity of transactions and analysis including management accounting functions which are customised for the user. The predicted unit costs and revenues of the products for the year ended 20th June 2021 are: Count on us" "Know it all Selling price 960 2,000 Variable costs Bespoke Technical Design 240 Marketing and customer service 160 360 Technical visit 160 400 600 The annual fixed costs to be covered by this initiative are estimated at 100,000,000. The target total sales for the first year is 250,000 packages. Accounts For You Ltd wishes to explore the financial implications of this volume of sales with an expected mix of products of either: (i) 30% "Count on us" customers and 70% Know it all customers, (ii) 40% "Count on us customers and 60% Know it all customers. Or Required: a) Using the above information, for each of the predicted mixes of sales, calculate the break-even in units and the predicted operating income for the year ended 30.6.2021, if the total target sales is achieved. In each case, your answer should provide a breakdown of the number of units of each product required for both break-even and operating income. Comment on the results. (10 marks) b) A proposal has been put forward to spend an additional 10,000,000 on fixed production and marketing costs to increase the volume of sales of Know it all. This initiative would only be worthwhile if it also contributed at least an additional 8,000,000 to the company operating income made under mix (i). Assuming that the initiative guarantees that sales of the same number of Count on us packages as in mix (i) above will be sold, how many Know it all packages would be required to meet the company's net income target? With these quantities of product sales, what would be the new percentage mix of products and the new operating income? (5 marks) c) Comment on how the information you have calculated in parts (a) to (b) could be used by the company in decision making and monitoring performance. (5 marks) 1. Accounts For You Ltd provides business software for small companies. On 1st July 2020, the company is planning to release two new accounting software packages. The price of each package includes one technical visit by Accounts For You Ltd staff, to customise the product and provide training. Details of the packages are as follows: Count on us is designed for very small businesses. It is compatible with company law and tax regulation requirements. It provides basic, easy to understand weekly analyses and final year accounts. Know it all is aimed at larger small businesses. Compatibility features are the same as Count on us and the package allows for greater complexity of transactions and analysis including management accounting functions which are customised for the user. The predicted unit costs and revenues of the products for the year ended 20th June 2021 are: Count on us" "Know it all Selling price 960 2,000 Variable costs Bespoke Technical Design 240 Marketing and customer service 160 360 Technical visit 160 400 600 The annual fixed costs to be covered by this initiative are estimated at 100,000,000. The target total sales for the first year is 250,000 packages. Accounts For You Ltd wishes to explore the financial implications of this volume of sales with an expected mix of products of either: (i) 30% "Count on us" customers and 70% Know it all customers, (ii) 40% "Count on us customers and 60% Know it all customers. Or Required: a) Using the above information, for each of the predicted mixes of sales, calculate the break-even in units and the predicted operating income for the year ended 30.6.2021, if the total target sales is achieved. In each case, your answer should provide a breakdown of the number of units of each product required for both break-even and operating income. Comment on the results. (10 marks) b) A proposal has been put forward to spend an additional 10,000,000 on fixed production and marketing costs to increase the volume of sales of Know it all. This initiative would only be worthwhile if it also contributed at least an additional 8,000,000 to the company operating income made under mix (i). Assuming that the initiative guarantees that sales of the same number of Count on us packages as in mix (i) above will be sold, how many Know it all packages would be required to meet the company's net income target? With these quantities of product sales, what would be the new percentage mix of products and the new operating income? (5 marks) c) Comment on how the information you have calculated in parts (a) to (b) could be used by the company in decision making and monitoring performance