You are the financial manager of a small ice cream company, planning to launch a new product. This is a small chocolate-coated ice cream, produced as a boxed unit containing 24 ice creams.

A) Using the following information, determine what would be the minimum number of units to be made each month:

• Selling price per unit - 15
• Variable costs per unit - 10
• Fixed costs per month - 6,000

Costing

• Calculations and explanation of each step
• Dealing with overheads full absorption costing and other costing methods.
• Justification of the chosen method
• Break-even calculation and explanation
• Interpretation and explanation of the results

B)

If the company finds that it is able to produce 2,000 units per month, what would be the new breakeven selling price? As a consequence, propose a selling price to the company directors for their next meeting, providing detailed reasons to justify your proposal.

Costing and pricing

• Break-even calculation and explanation
• Pricing cost plus, marginal cost, price takers etc. Evaluate the use of different costing methods for pricing purposes
• Marginal costing