Question
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, containing
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, containing no colouring or flavouring additives, available in a wide range of different varieties aimed at the childrens market. It will be produced as a boxed unit containing 24 ice creams. Prepare an information paper for senior managers within the company which explains the key financial statements comprising business accounts. It should describe each type of statement, indicating the general format and its role in the process of financial management. Reference should be made to any variations that may be made for different types of organisations. Describe the use of financial statements in the both financial accounting and management accounting, clearly distinguishing between these two functions. Indicate the significance of each function to the effective operation of a business. You are required to carry out a costing exercise for the new ice cream product. Begin by defining the following terms, with appropriate examples related to the production of the new ice cream: fixed cost variable cost direct cost indirect cost 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 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.
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