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Help me solve the following questions NUMBER FOUR 1. Thomas Vila has budgeted that output and sales of his single product will be 100,000 units
Help me solve the following questions
NUMBER FOUR 1. Thomas Vila has budgeted that output and sales of his single product will be 100,000 units in the coming year. At this level of activity, his unit variable costs are budgeted at Sh.50 and his unit fixed costs at Sh.25. His sales manager estimates that the demand for the product would increases by 1000 units for every decreased of Sh.1 in unit selling price (and vice versa) and that at a unit selling price of Sh.200 demand would be nil. Information about two price increases has just been received from suppliers: one is for materials (which are included in Thomas Vila( variable costs) and one is for fuel (which included in his fixed costs). Their effect will be to increase both the variable and fixed costs by 20% each over the budgeted figures. Thomas Vila aims at maximizing profits from his business. Required: a. Calculate before the cost increases the budgeted contribution and profit at the budgeted levels of 100,000 units. (3 marks) b. Calculate the level of sales at which profits would be maximized and the amounts of these maximum profits before the cost increases. (4 marks) c. Show whether and by how much Thomas Vila should adjust his selling price in respect to increases in: . Fuel costs. (2 marks) . Material costs. (2 marks) 2. Some businesses which supply two or more separate markets from a single source may decide to charge a higher price for sales to home markets than for export sales. The businesses may justify their pricing policy by stating that they need to earn foreign exchange from foreign markets and recover their research and development costs, plus production overheads against home demand.Required: i Critically explain briefly the rationale for such a differential pricing policy. (5 marks) ii Should earning of foreign exchange be a factor in a firm's pricing policy. (4 marks) (Total: 20 marks) NUMBER FIVE a) Explain the advantages of using Value Added Statements (VAS) for interdivision for comparisons in decentralized firm. (8 marks) b) TOB Lt. Is a manufacturing company that makes only three products X, Y, and Z. Data for the period ended last month are as follows: X Y Z Units produced and 12,000 16,000 8,000 sold Sh. Sh. Sh. Sales price per unit 50 70 Direct material cost per 16 24 20 unit Direct labour cost per 8 12 8 unit Production overheads Total Cost drivers costs Sh. Machine hours Machining costs 102,000 Production scheduling 84,000 Machine hours Set-up costs 54,000 Number of production runs Quality control 49,200 Number of production runs Receiving materials 64,800 Number of components receipts Packing materials 36.0100 Number of customer orders 390,000 Information on the cost drier is given as follows: X Y 7. Direct labour hours per unit Machine hours per unit 1 1/2Number of components per unit 8 Number of component receipts 18 80 64 Number of customer orders 20 10 Number of production runs 16 8 Required: Using activity based costing (TOB) show the cost and gross profit per unit for each product during the period. (12 marks) (Total: 20 marks)Step by Step Solution
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