Zoltan Consulting GmbH (ZCG) is a very large consultancy business that provides three types of consulting services, standard (S), intermediate (I) and complex (C) with prices and costs as follows:

S I C

Selling price per hour 50.00 100.00 150.00

Labour cost 41.00 78.00 117.00

Variable overheads 5.00 15.00 15.0

Total fixed costs per month are 75,000.

Budgeted revenue hours and maximum demand for each service for January are:

S I C

Budgeted revenue hours 5,000 2,500 5,000

Maximum demand 5,200 5,800 5,300

Required:

1. What is the breakeven revenue (to the nearest ) for January, assuming that the sales of each service are in the budgeted mix? Show all workings.

2. If ZCG sells all the hours that have been budgeted in January, what profit will it make? Show all workings.

3. If ZCG wanted to make a profit of 30,000 in January, what revenue (to the nearest ) would require to be achieved, assuming that the sales of each service are in the budgeted mix? Show all workings.

4. On the assumption that only sales of the service with the highest contribution to sales ratio are made up to maximum demand for it, what profit or loss would result? Show all workings.

5. On the assumption that only sales of the services with the highest and second highest contribution to sales ratio are made, with sales of each of these two services being made up to their maximum demand, what profit or loss would result? Show all working