QUESTION ONE

XYZ ltd manufactures three products and has received the following sales forecast with the following budget.

	Omo	Rexona	Palmolive
Unit sales	100000	100000	200000
Unit selling price (ksh)	1400	1800	2400
Variable cost per unit manufacturing (ksh)	750	600	1250
Selling (Ksh)	250	200	300

The fixed factory overhead is budgeted at ksh100 millionand the company's fixed selling and administration expense are forecast to be ksh30 million. The effective tax Rate is 30%

Required

i. Compute XYZ's ltd budgeted net income. (4 marks)

ii. Assuming the sales mix remains as budgeted, compute the Break Even Point both in total and for each product. (6 marks)

iii. Determine the totalsales XYZ ltd must have in order to earn a net income after Tax of ksh 22.5 million. (6 marks)

iv. Explain any two assumptions of BEP/CVP model. (4 marks)