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is urgent Question I Hajia Shikishiki plans to start business on I January, 2013 producing Sobolo a local soft drink loved by all. She has
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Question I Hajia Shikishiki plans to start business on I" January, 2013 producing Sobolo a local soft drink loved by all. She has estimated that production would start immediately with projected output for the first six months as follows: Jan 35,000 Feb 50,000 Mar 75,000 Apr 85,000 May 90,000 120,000 Expected sales (in units) to be as follows: Feb 40,000 Mar 80,000 Apr 83,000 May 87,500 an Jun 95,000 33,500 She has cstimated that in order to be competitive in the industry she will sell the product at GHe30 per bottle. All sales will be made on credit and customers will be allowed one month credit. The total cost of producing a bottle of Sobolo is given as follows: GHe 12 Raw materials Direct Labour cost Fixed overhead cost 3.5 Suppliers of raw materials will allow two months credit. Direct labour and fixed overhead costs will be paid as they are incurred. The fixed overhead cost include depreciation which is calculated on the straight line and allocated on monthly basis Hajia will not employ supervisory staff as her role will be to run the factory, but she will need administrative assistance. Her husband will deal with this initially at a salary of GHe3,600 per annum, but she expects to take on additional clerical staff from 1 March, 2013, at a cost of GHe9,000 per annumStep by Step Solution
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