a) As the new management accountant employed by a company you have been asked to supply financial results by product line to help in marketing decision making. The following account was produced for the year ended 30^th June 2022.

GH000

GH000

Sales

1,200

Cost of goods sold:

Materials

500

Wages

300

Production expenses

150

Marketing cost

100

1,050

Net profit

150

A statistical analysis of the figures shows the following variable element in the costs:

(%)

Materials

90

Wages

80

Production expenses

60

Marketing costs

70

Below is given, as percentages, the apportionment of the sales, and the variable elements of the costs among the five products manufactured.

Products

Total

A

B

C

D

E

Sales

30

15

7

28

20

100

Materials

40

20

10

20

10

100

Wages

15

25

10

25

25

100

Production expenses

30

10

10

30

20

100

Marketing costs

10

30

20

30

10

100

From the information given:

a) Prepare a statement for the year showing contribution by products and comment on these contributions.

b) Calculate the following:

i) The break-even sales level

ii) The orders of sales preference for additional orders to maximize contribution as a percentage of sales.

iii) A revised sales mix of the GH1,200,000 sales to maximize contribution assuming that existing sales by products can only be varied 10% either up or down.

iv) A product mix to maximize contribution if manpower availability were reduced by 10% but the product mix could be varied by up to 20%.

v) The percentage commission which could be offered to an overseas agent on an order of GH30,000 worth each of product A, C and E and obtain a 20% contribution on the total sales value.