Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q2: The Alpha Specialty, Inc. manufactures a product which sells for BD5. At present the company produces and sells 50,000 units per year. Unit variable
Q2: The Alpha Specialty, Inc. manufactures a product which sells for BD5. At present the company produces and sells 50,000 units per year. Unit variable manufacturing and selling expenses are BD 2.50 and BD 0.50, respectively. Fixed costs are BD 70,000 for factory overhead and BD 30,000 for selling and administrative activities. The sales manager is proposing that the price be increased to BD 6. To maintain the present sales volume, advertising must be increased. The company's profit objective is 10 percent of sales. a. Calculate the additional expenditure the company can afford for advertising. [2 marks] b. Calculate the new break-even point in units and Bahraini Dinars, using BD 6 selling price and the additional outlay from part a. [2 marks] Q2: The Alpha Specialty, Inc. manufactures a product which sells for BD5. At present the company produces and sells 50,000 units per year. Unit variable manufacturing and selling expenses are BD 2.50 and BD 0.50, respectively. Fixed costs are BD 70,000 for factory overhead and BD 30,000 for selling and administrative activities. The sales manager is proposing that the price be increased to BD 6. To maintain the present sales volume, advertising must be increased. The company's profit objective is 10 percent of sales. a. Calculate the additional expenditure the company can afford for advertising. [2 marks] b. Calculate the new break-even point in units and Bahraini Dinars, using BD 6 selling price and the additional outlay from part a. [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