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2 For Year 1 Royal Rose Ltd has produced the following budget figures for product Z. Per unit 125 Selling Price Variable Cost: Direct material
2 For Year 1 Royal Rose Ltd has produced the following budget figures for product Z. Per unit 125 Selling Price Variable Cost: Direct material Direct labor Overheads For the year, the budgeted fixed overhead is 120,000 and the budgeted sales are 5,500 units. Required: (a) The break-even point in units (b) The margin of safety in units (c) The budgeted profit for year 1 (d) The sales manager has suggested the following options for the next year: Option (1) Reduce the selling price to 118 per unit. This will increase sales by 2,000 units. Labor costs will increase by 3 per unit and fixed overheads will decrease by 10,000. Option (2) Increase the selling price to 165 per unit. This will decrease sales by 500 units and decrease fixed overheads by 12,000. Required: Calculate the budget profit for each of two options individually
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