Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show calculations and answer all the questions Question 1 You are recently employed and your predecessor left the company without handing over, leaving behind
please show calculations and answer all the questions
Question 1 You are recently employed and your predecessor left the company without handing over, leaving behind an incomplete management report. v Your manager has asked you to complete the report, details of which are below. Product A Product B Sales $30,000 vii Variable costs ii viii Contribution iii ix Fixed cost iv Profit $12,000 Contribution/Sales Ratio 40% 50% Break-even point i $16,000 Margin of Safety $17,500 vi Required: (a) Complete the report by calculating the figures i to x inclusive. (20 marks) (b) State the assumptions on which break-even calculations are based. (5 marks) Question 2 Desmond Ltd manufactures and sells a single product. The initial budget for the forthcoming period is: Material 40,000 Labour (33.3% (1/3) fixed) 27,000 Variable production overheads 10,000 Fixed production overheads Sales overheads (50% fixed) 6.000 10.000 93,000 The standard selling price is $100 per unit. Sales for the period are budgeted to be 1.200 units. The maximum manufacturing capacity for the period is 2.000 units. Two proposals have been put forward by management. Reduce the selling price to $95, which will enable 1,500 units to be sold Increase the selling price to $110, which will enable 850 units to be sold Required (a) Calculate, for the initial budget and each of the two proposals: Profit (5 marks) m) Break-even point in units (9 marks) (*) The amount of sales units required in order to earn a profit of $18.000 for the period. (Work to the nearest whole unit) (9 marks) (6) Advise management as to the best course of action (2 marks) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started