Question 3 Hydra Ltd is a company that sells sports glasses The business profit calculation for last year is as follows Sales revenue (2,000 units x $25) $50,000 Less Variable costs (20,000) Contribution margin 30,000 Less Fixed costs (22,000) Profit 8,000 Hydra Ltd has decided to increase the price of its product to $30 per unit The company management believes that if it increases its fixed advertising cost by $3,400, the next years sales volume will increase to 2,200 units Variable cost per unit will remain the same as last year TASK Show the calculation of the expected profit for Hydra Ltd's operation next year How many sports glasses would Hydra Ltd have to sell to earn as much profit next year as it did last year Do you agree with Hydra Ltd's decision Explain why or why not 7 marks Break even is composed of three financial figures selling price per unit, variable cost per unit, and fixed costs TASK Using these factors, devise two strategies to help a hotel operator which has continually failed to achieve the break even point (i e very low occupancy rate) Discuss your strategies in details 8 marks Woof Ltd sells pet food in 10 kilogram bags for $12 40 per bag Sales estimates (in the number of units) for the two months of the year are as follows Bags January 20,000 February 17,000 All sales are cash sales Woof Ltd purchases bags of pet food at $9 40 per bag on credit and pays for them the month after the purchase Purchases estimates (in the number of units) for the two months of the year are as follows Bags January 19,250 February 16,500 Last December purchases were 21,000 bags General and administrative expenses total $8,000 per month (including $10,000 depreciation), and Woof Ltd pays for these expenses (except for depreciation) in the same month they are incurred January's current liabilities (all to be paid in January) total $35,500 The business' cash balance on 1 January is $38,000 TASK Calculate the total cash receipt for January and February Provide workings Calculate the total cash payments for January and February Provide workings Calculate the cash balance at the end of January and February Provide workings Explain two benefits of preparing a cash budget for a company 10 marks Total 25 marks

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Question 3 Hydra Ltd is a company that sells sports glasses  The business profit calculation for last year is as follows  Sales revenue (2,000 units x $25) $50,000 Less  Variable costs (20,000) Contribution margin 30,000 Less  Fixed costs (22,000) Profit 8,000 Hydra Ltd has decided to increase the price of its product to $30 per unit  The company management believes that if it increases its fixed advertising cost by $3,400, the next years sales volume will increase to 2,200 units  Variable cost per unit will remain the same as last year   TASK  Show the calculation of the expected profit for Hydra Ltd's operation next year  How many sports glasses would Hydra Ltd have to sell to earn as much profit next year as it did last year  Do you agree with Hydra Ltd's decision  Explain why or why not   7 marks  Break even is composed of three financial figures  selling price per unit, variable cost per unit, and fixed costs   TASK  Using these factors, devise two strategies to help a hotel operator which has continually failed to achieve the break even point (i e  very low occupancy rate)  Discuss your strategies in details   8 marks  Woof Ltd sells pet food in 10 kilogram bags for $12 40 per bag  Sales estimates (in the number of units) for the two months of the year are as follows  Bags January 20,000 February 17,000 All sales are cash sales  Woof Ltd purchases bags of pet food at $9 40 per bag on credit and pays for them the month after the purchase  Purchases estimates (in the number of units) for the two months of the year are as follows  Bags January 19,250 February 16,500 Last December purchases were 21,000 bags  General and administrative expenses total $8,000 per month (including $10,000 depreciation), and Woof Ltd pays for these expenses (except for depreciation) in the same month they are incurred  January's current liabilities (all to be paid in January) total $35,500  The business' cash balance on 1 January is $38,000   TASK  Calculate the total cash receipt for January and February  Provide workings  Calculate the total cash payments for January and February  Provide workings  Calculate the cash balance at the end of January and February  Provide workings  Explain two benefits of preparing a cash budget for a company   10 marks   Total  25 marks

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Question 3 Hydra Ltd is a company that sells sports glasses. The business profit calculation for last year is as follows: Sales revenue (2,000 units

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Sales revenue (2,000 units x $25)	$50,000
Less: Variable costs	(20,000)
Contribution margin	30,000
Less: Fixed costs	(22,000)
Profit	8,000