Quatton 1 Question 1 Not yet answered Marked out of 20.00 Duke Ltd manufactures and sells decorated surfboards. On its 2021 budget, Duke estimates the following: Selling price Variable cost per surfboard $400 Flag question $200 Annual fixed costs $100 000 Net profit after tax $240 000 Income tax rate 30% The June 2021 income statement reported that sales were not meeting expectations. For the first six months of the year, only 350 units had been sold at the established price, with variable costs as planned, and it was clear that the net profit after tax projection for 2022 would not be reached unless some actions were taken Required (show your calculations): 1. If no changes are made, compute the number of units to sell to achieve its net profit 5 marks after tax for the year. 2. The management accountant presented the below mutua exclusive rnatives to 15 marks the chief executive officer. Determine which alternative Duke should select to achieve its net profit after tax objective: a. Reduce the selling price by $40. The sales organisation forecasts that at this significantly reduced price, 2 700 units can be sold during the remainder of the year. Total fixed costs and variable costs per unit will stay as budgeted. b. Lower variable cost per unit by $10 using less-expensive direct materials and slightly modified manufacturing techniques. The selling price will also be reduced by $30, and sales of 2 200 units are expected for the remainder of the year, c. Reduce fixed costs by $10 000 and lower the selling price by 5%. Variable cost per unit will be unchanged. Sales of 2 000 units are expected for the remainder of the year. Quatton 1 Question 1 Not yet answered Marked out of 20.00 Duke Ltd manufactures and sells decorated surfboards. On its 2021 budget, Duke estimates the following: Selling price Variable cost per surfboard $400 Flag question $200 Annual fixed costs $100 000 Net profit after tax $240 000 Income tax rate 30% The June 2021 income statement reported that sales were not meeting expectations. For the first six months of the year, only 350 units had been sold at the established price, with variable costs as planned, and it was clear that the net profit after tax projection for 2022 would not be reached unless some actions were taken Required (show your calculations): 1. If no changes are made, compute the number of units to sell to achieve its net profit 5 marks after tax for the year. 2. The management accountant presented the below mutua exclusive rnatives to 15 marks the chief executive officer. Determine which alternative Duke should select to achieve its net profit after tax objective: a. Reduce the selling price by $40. The sales organisation forecasts that at this significantly reduced price, 2 700 units can be sold during the remainder of the year. Total fixed costs and variable costs per unit will stay as budgeted. b. Lower variable cost per unit by $10 using less-expensive direct materials and slightly modified manufacturing techniques. The selling price will also be reduced by $30, and sales of 2 200 units are expected for the remainder of the year, c. Reduce fixed costs by $10 000 and lower the selling price by 5%. Variable cost per unit will be unchanged. Sales of 2 000 units are expected for the remainder of the year
