Exam Paper Five

Question Three

Kasuku Ltd manufactures two products Alpha and Beta, the production of each of the products is in a different plant facility. You are provided with the information below for each of the products for the forthcoming quarter of September-December 2013.

Product Alpha

Budgeted sales Sh 3 million

Contribution margin ratio 40%

Margin of safety 750,000

Product Beta

Budgeted profit Sh 600,000

Contribution margin ratio 60%

Break-even point Sh 1,500,000

Required

• With respect to product Alpha, determine the following:
• The contribution margin
• The total variable cost
• The Break-even point in sales value
• The total fixed cost
• With respect to product Beta, determine the following:
• The budgeted total fixed costs
• The budgeted contribution margin
• The margin of safety in value terms
• The budgeted sales
• Determine the budgeted profit of Kasuku Ltd.