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Budgeted information for Koala LLC. for the following period, analyzed by product, is given below: Product Product II Product III Sales units (000s) Selling price
Budgeted information for Koala LLC. for the following period, analyzed by product, is given below: Product Product II Product III Sales units (000s) Selling price per unit () Variable cost per unit () Attributable fixed costs ( 000s) 225 11.00 5.80 275 376 10.50 6.00 337 190 8.00 5.20 296 General fixed costs which are apportioned to products as a percentage of sales, are budgeted at 1,668,000. Required: i. Calculate the budgeted profit of Koala LLC and of each of its products, in proper columnar format. ii. Recalculate the budgeted profit of Koala LLC on the assumption that Product III is discontinued, with no effect on the sales of the other 2 products. State any notes that you may need to add here. iii. Additional advertising, to that included in the budget for Product I, is being considered. Calculate the minimum extra sales units required of Product I to cover additional advertising expenditure of 80,000. Assume that all other fixed costs will remain unchanged. iv. Calculate the increase in sales volume of Product II that is necessary to compensate for the effect on profit, of a 10% reduction in the selling price of the product. State any notes that you may need to add here
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