Answered step by step
Verified Expert Solution
Question
1 Approved Answer
B2 - Atawila Ltd Atawila Ltd is a recently established business set up to sell three types of desks: Kids desks, Office Desks and Home
B2 - Atawila Ltd Atawila Ltd is a recently established business set up to sell three types of desks: Kids desks, Office Desks and Home Desks. You have just joined the business on placement and are keen to use your management accounting skills. The business has been investing heavily in new marketing campaigns in an effort to improve market share and build their profile. Your first task is to consider the breakeven position of the business. The following budgeted data has been made available to you for 2020: Home Kids Desks Office Desks Desks Selling Price 60 300 180 Units 30,000 25,000 20,000 Material Labour Contribution 20 100 30 10 30 15 30 170 135 Budgeted Fixed Overheads for 2020 are 1,570,000. Required: 1. Calculate the breakeven units per product type and in total for the business showing clear workings and your assumptions (any method acceptable). Briefly comment on the level of risk facing Atawila Ltd. (6 marks) 2. The Sales Director has just sent an e-mail stating that market trends are suggesting that due to the Covid19 Pandemic and more people working from home the sales of Office Desks are likely to fall drastically and more Home Desks will be purchased instead. What impact would this have on your breakeven calculations in Requirement 1 and the level of risk facing the business? (Calculations can be added if you wish to illustrate your points). (4 marks) Word count 150 words TOTAL 10 MARKS
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started