Question
ABC Ltd budgeted to sell 120 products, or 5% of the total market for 2016, at a contribution margin of $0.6 per unit. The budgeted
ABC Ltd budgeted to sell 120 products, or 5% of the total market for 2016, at a contribution margin of $0.6 per unit. The budgeted average price was $0.78 per unit. The operating data of 2018 showed that the company flew 100 products with an average price of $0.72 per unit. The spread of a fatal infectious disease in the early part of the year in several countries decreased the total products flown by all company for the year by 15%. There is no flexible-budget variance for all costs.
Required: a Assess the effects of price, sales volume, market size, and market share on ABC Ltd' operating results for 2016. (18 marks)
b Explain the risks posed by the global economic environment for ABC Ltd, and suggest strategies for mitigating those risks. (7 marks)
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