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PLEASE ANSWER QUESTION e) Roadrunner Ltd sells biscuits in boxes to supermarkets throughout the country. In the financial year ended 30 June 2021, the company
PLEASE ANSWER QUESTION e) Roadrunner Ltd sells biscuits in boxes to supermarkets throughout the country. In the financial year ended 30 June 2021, the company sold a total of 500,000 boxes of biscuits at $4 per box. The gross profit margin achieved on these sales was 75%. Operating expenses consisted of the following: Advertising Staff salaries Other administrative expenses $ 100,000 500,000 600,000 Cost of sales are considered as variable costs, and all other expenses are treated as fixed costs. Required: c) Calculate the profit or loss earned in the financial year ended 30 June 2021. (172 marks) e) Roadrunner Ltd is considering outsourcing part of the processing functions to another company in a bid to better manage costs. Outsourcing will enable the company to reduce the fixed costs by 15%, but would increase the variable cost per box by $0.50. Calculate the number of boxes to be sold if Roadrunner Ltd wishes to achieve the same amount of net profit in part (C). Advise whether or not the proposed outsourcing is a better option. Discuss quantitative and qualitative factors. Show all workings to secure maximum marks
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