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Part B Kim Ltd produces and sales men shirt. Kim plans to produce new product for next year and has estimated costs below: Expected Variable
Part B Kim Ltd produces and sales men shirt. Kim plans to produce new product for next year and has estimated costs below: Expected Variable Cost per unit Direct materials Direct labour Manufacturing supplies Selling price per unit Annual Fixed Costs Taxes on property Required (show your working): (a) Assume that income tax rate is 25%, compute the number of units that must be sold to (5 marks) earn a prot after tax of 567,500. (b) If Kim Ltd plans to run new advertising campaign and at the same time reducing sales (5 marks) price to $55 per unit. By doing so Kim Ltd expects that the sales will increase by 5 000 units and increase the profit before tax $120,000. You are required to determine how much the amount of additional advertising cost needs to spend for these purposes
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