this is paper 2 of 2

I did these but unsure of the answers for a, b and c.

price reductions expected from competitors, management has decided to reduce the wholesale price of its calculators from $22.50 to $20.00 per unit effective January 1, 1994. At the same time the company plans to spend an additional $28,500 on advertising during fiscal year 1994. As a consequence of these actions management estimate that 80% of tstota revenue will be der ved from its calculator salesas compared wit 75% in 1993. As in prior years the sales mix is assumed to be the same at all volume levels. (That is the sales mix in units for 1994 will not necessarily be the same as in 1993; however, the sales mix in 1994 will be constant no matter what volume levels occur). Fixed overheads except for additional advertising costs will not change in 1994. It is estimated that direct material costs will fall by 10% for the tape recorders and 20% for the calculators in 1994. Direct manufacturing labour costs per unit for both products will increase by 10% in the coming year. Variable overheads will remain unchanged at $2.00. per unit. Required: (a) How many tape recorders and electronic calculators did Helios Limited have to sell in 1993 to break-even? Which product is potentially more profitable? What is the basis of (6 marks) your conclusion? 1994 to break even? What will total sales of the company be at this point? How much total sales revenue is required if Helios Limited is to earn net income (b) How many tape recorders and electronic calculators will Helios Limited have to sell in (6 marks) (4 marks) equal to 12% on sales in 1994? The tax rate is 40% (d) How can profits be maximized through the use of sales mix? (5 marks) (e) What are the benefits to be derived from achieving a lower break even point? (4 marks) END OF QUESTION PAPER price reductions expected from competitors, management has decided to reduce the wholesale price of its calculators from $22.50 to $20.00 per unit effective January 1, 1994. At the same time the company plans to spend an additional $28,500 on advertising during fiscal year 1994. As a consequence of these actions management estimate that 80% of tstota revenue will be der ved from its calculator salesas compared wit 75% in 1993. As in prior years the sales mix is assumed to be the same at all volume levels. (That is the sales mix in units for 1994 will not necessarily be the same as in 1993; however, the sales mix in 1994 will be constant no matter what volume levels occur). Fixed overheads except for additional advertising costs will not change in 1994. It is estimated that direct material costs will fall by 10% for the tape recorders and 20% for the calculators in 1994. Direct manufacturing labour costs per unit for both products will increase by 10% in the coming year. Variable overheads will remain unchanged at $2.00. per unit. Required: (a) How many tape recorders and electronic calculators did Helios Limited have to sell in 1993 to break-even? Which product is potentially more profitable? What is the basis of (6 marks) your conclusion? 1994 to break even? What will total sales of the company be at this point? How much total sales revenue is required if Helios Limited is to earn net income (b) How many tape recorders and electronic calculators will Helios Limited have to sell in (6 marks) (4 marks) equal to 12% on sales in 1994? The tax rate is 40% (d) How can profits be maximized through the use of sales mix? (5 marks) (e) What are the benefits to be derived from achieving a lower break even point? (4 marks) END OF QUESTION PAPER