Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

INFORMATION FuXion Manufacturers produces a single product. Budget and standard cost details for next year include: Sales volume, units 90 000 Selling price per unit,

INFORMATION FuXion Manufacturers produces a single product. Budget and standard cost details for next year include: Sales volume, units 90 000 Selling price per unit, R 24.00 Variable production cost per unit, R 6.50 Variable selling and administration per unit, R 2.10 Fixed production costs, R 650 000 Fixed selling and administration costs, R 230 400 Sales commission 5% of selling price REQUIRED: 2.2.1 Calculate the break-even quantity. (3 Marks) 2.2.2 Calculate the percentage by which the budgeted sales volume can fall before the company begins to make a loss (round off answer to two decimal places). (3 Marks) 2.2.3 The new CEO of FuXion Manufacturers has set an ambitious plan to generate a profit of R600 000 from the budgeted sales of 90 000 units for the year. As the management accountant, you have been asked to determine a revised price at which, ceteris paribus, a unit of the product should be sold to enable the business to attain the R600 000 target profit for the year (round off answer to two decimal places). (4 Marks) 2.2.4 The management of FuXion Manufacturers is now considering improving the quality of the product and increasing the selling price to R30 per unit. Sales volume will be unaffected, but fixed production costs will increase by 25% and variable production costs will increase to R8.40 per unit. You have been asked to undertake a comparative analysis to unpack the profitability of the proposal and make a recommendation to management.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

IT Auditing And Sarbanes Oxley Compliance Key Strategies For Business Improvement

Authors: Dimitris N. Chorafas

1st Edition

036738650X, 978-0367386504

More Books

Students also viewed these Accounting questions

Question

Describe how projective tests are used.

Answered: 1 week ago