Question 5 (11 marks)

Scooters Ltd sells three types of scooters. It has fixed costs of $258,000 per month. The sales and variable costs of these products for April are shown below:

	S1	S2	S3
Sales	$1 000 000	$1 500 000	$2 500 000
Variable costs	$ 700 000	$ 900 000	$1 250 000

1. Determine the sales mix of the three products. (1.5 marks)
2. Calculate the break-even point in sales dollars for the company. (3.5 marks)
3. Calculate thebreak-even point in sales dollars for each scooter. (1.5 marks)
4. Calculate the margin of safety at the present sales level in dollars. (1.5 marks)
5. Discuss the weaknesses of the CVP analysis technique as a financial planning tool.

Can flexible budgets be used to overcome its weaknesses? Explain.

Word limit: 200 words (3 marks)