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psung Lid produces and sells the AS mobile phone with three models in the range, vil) Trade discounts are only given to CPW World.- the AS10, AS20 and the AS30. In the UK Apsung Lid sells via its own stores vili) Sales commission is 1.25% of selling price.+ located in all major cities as well as to the electronics superstore CPW World. To ixx) Fixed manufacturing costs should be allocated to customers based on encourage CPW World to stock the phones a substantial trade discount has been sales value of each product.~ agreed.+ x) Sales and marketing costs as well as administration costs should be In addition, Apsung Lid sells the phones directly to customers online of which 70% allocated to Home Stores, CPW World, UK online and Overseas online of these sales relate to the UK with the remainder sold overseas.+ in the proportion 3:2:2:1.+ The latest income statements for Apsung Lid are detailed below.+ Question continues on next page 4 (continued) AS10 A $20 A$30 Total E'000 E'000 E'000 E'000 Required: Sales Revenue 1,737 2.895 1.158 5.790 Variable Manufacturing Costs- 530 905 1,222 2,657 a) Prepare a detailed customer profitability analysis for Apsung Lid by Trade Discounts 25 25 75 customer group. (14 marks)- Salesforce commission costs 15 25 12 - Total costs 570 955 1279 2.804 Contribution 1.167 1.940 (121) 2.986 Fixed manufacturing costs. 185 302 382 869. Analyse the results provided for Apsung Lid as well as your own results Sales and marketing costs- 2324 calculated in part a). Include any advice that you think might be important for Administration costs 185 Apsupa Ltd to consider. Net Income 982 1.638 (503) 1.700 Apsung Lid want to understand the profitability of their products when sold via the different routes to market, particularly as the AS30 has a negative contribution and have provided the following information relating to sales:+ The company's own stores account for 50% of the total sales revenue and these are split between the AS10, AS20 and AS30 in the proportions 3:5:2.- CPW World are a growing source of income and now account for 20% of the total sales revenue. They sell $115,800 of the AS30 and sales of the AS10 are double this amount. The balance of their sales relate to the AS20.+ The online UK sales have the same breakdown by product as seen in their own stores.~ The balance of sales by product relates to the online overseas customers.+ In addition:+ V) The price of each type of product is the same for all customers.+ vi) Variable costs can be allocated to products in the same percentage per product as shown in the income statement
