1. Matafwali Engineering Plc manufactures two types of TV sets LCD and CRT both having only one model. The LCD and CRT television sets sell for K 9,000 and K5,000, respectively. The company sells its products through its own stores and other outlets. Total fixed expenses are K15,000,000 per month. Variable expenses and monthly sales data are given below:

LCD CRT

Variable expenses K5,000 K2,000

Monthly sales in units 2,000 3,000

Required: (unless stated figures should be computed for one month): Each question carries one mark

1. Determine Breakeven total volume of sales and sales volume for each product.
2. Determine sales volume and sales revenue for the company to earn K500,000 profit after 30% profit tax.
3. The company has planned to incur K 200,000 monthly selling (promotional) expenses to increase sales volume for its LCD TV sets to 4,000. If the plan materializes and other things remain constant, determine breakeven sales volume and sales revenue for the company.
4. The company has planned to buy new and improved technology that reduces variable production expenses for its LCD TV set to K4,000 while increasing its monthly fixed production costs by K500,000. If the plan materializes and other things remain constant, determine Breakeven sales volume and sales revenue for the company.
5. If the company is guaranteed with total sales volume of 10,000 TV sets in a given month, should it go for option c or d above given that sales mix remained constant as provided in each of the two options? Why? What if the guaranteed total sales volume of 7,000 instead of 10,000? Why? What should be the guaranteed total sales volume for the two options to provide equal profit to the company?

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