QUESTION $2$A

Xiaomi Media sells a range of media and gaming products in package deals. The products sold within bundles are as follows.

PS$5$ Apple watch Speaker Bullet

Selling Price $()650150200$

Variable Cost $()30075125$

Package A consists of a PS$5$ and an Apple watch and is sold for a discounted price of $725.$

Package B consists of a PS$5,$ an Apple Watch and two speakers and is sold for a discounted price of $875.$

Currently packages are sold in a ratio of $2$ Package As for every $3$ Package Bs and $500$ packages are sold each month. Fixed costs are expected to be $120,000$ for the month.

Required

$2\mathrm{.}1.$ Calculate the contribution per package for Package A and Package B$.$

$(2$ marks$)$

$2\mathrm{.}2.$ Calculate the break$-$even point $($in number of packages and sales revenue$)$

$2\mathrm{.}2\mathrm{.}1.$ If only Package As are sold $(1$ mark$)$

$2\mathrm{.}2\mathrm{.}2.$ If only Package Bs are sold $(1$ mark$)$

$2\mathrm{.}2\mathrm{.}3.$ If both packages are sold in the current sales mix, calculate the breakeven point per

mix first, the units for each product and the total sales revenue. $(2$ marks$)$

$2\mathrm{.}3.$ Calculate the margin of safety $($in number of bundles and as a percentage$)$ if the current sales mix remains unchanged. $(2$ marks$)$

$2\mathrm{.}4.$ Calculate the current expected profit. $(2$ marks$)$

$2\mathrm{.}5.$ Calculate the number of packages which need to be sold in order to achieve a profit of $75,000$ in the month assuming the sales mix remains unchanged. $(2$ marks$)$

$2\mathrm{.}6.$ Write a memo to management which considers:

$2\mathrm{.}2\mathrm{.}1.$ Which is the best package sell and why?

$2\mathrm{.}2\mathrm{.}2.$ Whether this selling package is realistic and why or why not?

$2\mathrm{.}2\mathrm{.}3.$ Explain how else the profitability of the business could be improved, using

academic references where appropriate. $(3$ marks$)$ answer it properly and in excel also make spreadshhet with formulas