Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 - Continued (b) Apple Ltd is going to launch a new product. The following information is the estimates for the forthcoming financial year.

image text in transcribed

Question 3 - Continued (b) Apple Ltd is going to launch a new product. The following information is the estimates for the forthcoming financial year. $ Sales 700,000 Direct materials 140,000 Direct labour 105,000 Factory overheads - variable 35,000 - fixed 80,000 Administrative and selling costs - fixed 160,000 The planned production capacity is 70,000 units (50% of total production capacity). It is assumed that the company sells all the products. Required: (1) Calculate the breakeven point in sales dollars. (2 marks) (ii) Calculate the margin of safety in units at the planned level of production. (2 marks) (i) Determine the net profit under the planned level of production capacity. (2 marks) (iv) The marketing manager has suggested that an increase in advertising expense of $399,700 and a sales commission of 10% of selling price would bring sales volume up to 100% of the production capacity. Calculate the new selling price per unit if total profit is to remain the same. (4 marks) (v) The CEO wants to find out that the estimated selling price for the product if the company can sell 100% of the production capacity by using the absorption costing approach to cost-plus price. If the investment of $640,000 is needed for this project and the company's required rate of return is 15% on all investment. Calculate the markup percentage required to achieve the desired ROI and the new selling price per unit (6 marks) [Total for Question 3: 25 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Reform In Transition And Developing Economies

Authors: Robert W. McGee

1st Edition

0387257071, 9780387257075

More Books

Students also viewed these Accounting questions

Question

=+46. Monthly gas prices, part 3. Using the data from Exercise

Answered: 1 week ago

Question

1. To take in the necessary information,

Answered: 1 week ago