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Analytical Questions Aysha Bakery specializes in selling European bread and deserts. The bakery reports the following total costs at two levels of production. 5,000 Units
Analytical Questions Aysha Bakery specializes in selling European bread and deserts. The bakery reports the following total costs at two levels of production. 5,000 Units 10,000 Units $20,000 4,000 34,000 Sugar used for making $10,000 bread and deserts Marketing on Social Media 4,000 A French Baker to make 17,000 customed cakes Indirect materials 1,000 Taxes 6,000 Depreciation 1,500 2,000 6,000 1,500 Requirements: 1. Classify each cost as variable or fixed. Justify Your answer. (Rubric: 0.5 mark for each correct classification and 1 for the correct Justification. Total 4 marks) RXY Co., a manufacturer of electronic tablets. The below Illustration presents relevant data for the tablets sold by this company in 2019. Sales Price Variable Costs Fixed Costs Sales $25 pertablets $15 Per Unit $135,000 20,000 Units Instructions: (Use the Equation method only) a. What is the Net income for 2019? (Rubric: 1 mark for the correct formula and the calculations and 1 for the correct answer. Total 2 marks) b. What is the break-even point in (1) units and (2) dollars for 2019? (Rubric: 1 mark for the correct formula and the calculations and 1 for the correct answer. Total 2 marks) c. I. Assume that management set the sales target for the year 2020 at a level of $550,000 (22,000 tablets). RXY's management believes that to attain the sales target in 2020, the company must incur an extra fixed expense of $10,000 for promotion in 2020, with all other costs remaining the same. What will be the break- even point in sales dollars for 2020 if the company spends the extra $10,000 on fixed costs? (Rubric: 2 mark for the correct formula and the calculations and 1 for the correct answer. Total 3 marks) If the company spends the additional $10,000 for promotion in 2020, what is the sales level in dollars and units required to equal the 2019 Net income you calculated in part a? (Rubric: 2 mark for the correct formula and the calculations and 1 for the correct answer. Total 3 marks)
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