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Describe Life cycle costing and explain the essential features of it. 10 marks You are the assistant manager in ABC Ltd, a company produces and
- Describe Life cycle costing and explain the essential features of it. 10 marks
- You are the assistant manager in ABC Ltd, a company produces and sells electronic calculators. ABC Ltd intended to extend is market to the norther region also. The fixed cost of production for the period estimated to be $60,000. The variable cost per unit is calculated to be $10, covering the direct material and labour. The company has decided to charge a selling price of $20 per calculator. The Accounts manager asked you to answer the following questions:
- How many calculators should be sold to be at Break-even?
- To get a profit of $30,000, how many calculators should be sold?
- If you were able to sell 8000 calculators, what will be the profit?
- To earn a profit of $30,000 on sale of 8000 calculators, what selling price per calculator should have to be charged? (fixed costs remains $60,000, and variable cost $10)
- How many more calculators should be sold to cover an extra marketing expense of $8000? 10 marks
- CVP Analysis is subject to a number of underlying assumptions and limitations.
Briefly describe Cost Volume Profit analysis and state the underlying assumptions.
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