A company manufactures and sells three products and the details of these products are:-

The fixed costs are apportioned to products by using an overhead recovery rate based on the direct labour hours in the production process.

Required

(a) What profit was expected when the annual plan was prepared?

(b) How many units of each product must be sold so that the company operates at its break-even point. Assume that the products are always sold in the ratio of 1X : 1.2Y and 0.8Z?

(c) How many units of each product must be sold to generate a profit of 66 800 when the products are sold in the ratio of 1X : 1.2Y and 0.8Z?

(d) What would be the effect on the companys profit if the units sold increased by 20 per cent if the selling price of each product was reduced by 10 per cent?

Product X Product Y Product Z 70 Selling price per unit Variable costs per unit Fixed costs per unit Profit per unit (37) (30) (30) [25] 15 (20) (20) Expected sales for the year-units 1000 1200 800