Question
Sunset Technologies Solutions sells ready to use QuickBooks software to small to medium business enterprises. Sunset forecast to sell 1,000 units of its QuickBooks at
Sunset Technologies Solutions sells ready to use QuickBooks software to small to medium business enterprises. Sunset forecast to sell 1,000 units of its QuickBooks at a selling price of BWP450 Per unit. They predict that they can make operating profit of BWPBWP309,540. The company expects to incur total cost of BWP105.00 per unit during the manufacture of this software and an additional of BWP15.00 per unit for freight and administration costs. The senior accounted has also predicted annual fixed costs of BWP350,460. Required
a) Determine the breakeven point and margin of safety for Sunset Technologies both in units and value.
b) Compute Sunset Technology Solutions operating profit if there is 15% increase in sales volume.
c) The senior management expects the manufacturing costs will increase by 10% and freight and admin costs will decrease by 20%. Assuming the entity maintains profit of BWP309,540 and selling price remains the same, calculate total Revenue that should be achieved.
d) During the year, Tax authorities made a public announcement that income tax rate will increase from 12% to 15%. Briefly describe how decrease in the income tax rate can affect Sunset Technologies Solutions the breakeven point. (round youre your answer to the nearest whole number.)
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