Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please dont solve in paper please solve all question since they are related Question 4 Sports Ltd. Is selling sports goods. Company is planning to

image text in transcribed
please dont solve in paper
please solve all question since they are related
Question 4 Sports Ltd. Is selling sports goods. Company is planning to sell 150,000 units of one of its products, in the next financial year. The selling price of a Product is OMR 20 per unit. Fixed cost for the period is OMR 400,000 and company is expected to earn a profit of OMR 500,000. Company has appointed a new production manager who is suggesting using an advanced production process. The fixed cost of the new process will be OMR 650,000. Company is expecting that variable cost per unit will reduce to OMR 6 per unit. Market competition is intense so selling price will remain the same as before. Production capacity of the advanced processes would be 150,000 units in the period which is same as before. REQUIRED: Calculate the following for the existing Process: (i) breakeven point in units. (ii) margin of safety in percentage (iii) contribution sales ratio. (C/S Ratio) (4 marks) (2 mark) (2 mark) (b) Showing the additional calculation Advise management if sale is 110,000 units, whether to change the production process. (6 marks) (C) Showing the additional calculation Advise management, how many units company should sell to make the advanced process more profitable than the existing Process. if sale is 110,000 units, whether to change the production process. (6 marks) (d) Identify and explain 2 limitations of break-even analysis. (5 marks) (Total 25 Marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions