Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A manufacturer incurred the following costs in a period for his sole product: TZS 8,000,000 12,000,000 2,000,000 7,000,000 29,000,000 Labour [25% variable] Materials [100%

 

A manufacturer incurred the following costs in a period for his sole product: TZS 8,000,000 12,000,000 2,000,000 7,000,000 29,000,000 Labour [25% variable] Materials [100% variable] Selling costs [10% variable] Other costs [fixed] Total Costs A normal period's sales are 500 units at TZS 70,000 each, but up to 650 units could be made in a period. Various alternatives are being considered: i. Reduce the price to TZS 63,000 each and sell all that could be made; ii. Increase the price to TZS 80,000 each at which price sales would be 400 units; iii. Keep the present plan. What is the most profitable plan? What are the C/S ratios? What is the break-even point for each alternative?

Step by Step Solution

3.44 Rating (173 Votes )

There are 3 Steps involved in it

Step: 1

To determine the most profitable plan the CS ratio contribution to sales ratio and the breakeven points for each alternative need to be calculated The CS ratio is a measure of how much each sale contr... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu

6th Canadian edition

013257084X, 1846589207, 978-0132570848

More Books

Students also viewed these Accounting questions

Question

6-3. Explain the concept "term structure of interest rates."

Answered: 1 week ago

Question

How can humanity increase its collective wisdom? Explain in detail.

Answered: 1 week ago

Question

Explain linear-cost behaviour.

Answered: 1 week ago