Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Elektra King Ltd manufactures a single product which it sells for 200. The details of the costs are as follows: Elektra King has budgeted production
Elektra King Ltd manufactures a single product which it sells for 200. The details of the costs are as follows: Elektra King has budgeted production and sales to be 3,000 this year but is only expecting 2,500 . Required: a) Calculate Elektra King's break-even sales volume AND revenue b) As an accountant, you have a client who does not understand the concept of Break-Even, explain it simply and clearly to him. He has heard of a Break-even chart and wants to know what it is and how it may help him c) Elektra King's Managing Director is concerned with the sales forecast, he needs the business to generate a profit of 130,000 in order to support his lifestyle. Using the figures above, calculate the sales volume necessary to obtain his required profit. d) The salesmen insist that 2,500 units is the maximum they can sell. In order to achieve the Managing Director's required profit he must reduce EITHER Variable Costs or Fixed Costs: i) Show by how much the variable Cost per unit must he reduced ii) Show by how much the annual Fixed Costs must be reduced
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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