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please answer all questions ans show calculation QUESTION 1 Banner Ltd budgets its costs per unit for a single product thus: N$ Variable costs Direct

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QUESTION 1 Banner Ltd budgets its costs per unit for a single product thus: N$ Variable costs Direct material 3 Direct labour 5 Production overhead Selling overhead Fixed costs Production overhead Selling overhead 1.5 Administration overhead 13.0 -- 1 0.5 The above are based on a budgeted production and sales volume of 160,000 units per year. The product has a budgeted selling price of N$16 per unit. The management is currently considering two proposals: (1) To reduce the selling price to N$15 per unit. This would cause sales to increase to 200,000 units with no change to any of the fixed costs, but overtime premium of 50% would be paid on units above 160,000 (ii) To increase the selling price to N$18 per unit. This would cause sales to fall to 130,000 units. This would give a saving of N$20,000 in fixed selling overhead. (a) You are required to Calculate the profit on the original budget, and each of the two proposals, and state which course of action the company should undertake. (40 marks) (b) The company is considering a one-off order for 15,000 units at a selling price of N$12 per unit. This would cause an increase in fixed production overhead of N$8,000. There would be no variable selling overhead incurred on this order, but an overtime premium of 40% would have to be paid. (40 marks) You are required to: Calculate the increase or decrease in profit that this order would generate. (10 marks) (c) The managing director requires a profit of $10,000 on the above order. You are required to: Calculate the selling price per unit for the special order that would achieve this objective. (10 marks)

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