(b) Calculate the number of units that the organisation would have to sell if it did not change the price charged but maintained the profit level attained in the previous year.
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- BAX Plc. produces and sells a specialised computer software programs. Estimated unit data for next year are as follows: Per unit £ £ Selling price 600 Variable costs: Labour 200 Materials 40 Variable overheads. 10 250 Profit 350 Anticipated fixed costs for the year are £80,000 for administration and £60000 for selling and distribution. Estimated sales for the year are 640 computer soft wares. You have been recently hired as graduate business analyst and for business decision-making purposes in BAX Plc. You are tasked to: calculate Breakeven point in terms of number of software programs sold. calculate The margin of safety as a percentage of estimated sales. The company’s target profit for the year is £56000. Discuss whether the estimated sales volume will be sufficient to achieve this target.…Give typing answer with explanation and conclusion A business manufactures a single product with a selling price of £21 and variable unit costs of £7. Period fixed overheads are £4,942 per month. Current production levels are 700 units per month (at 80% capacity). A customer has offered to buy up all of the business spare capacity for £3,220. Required: Evaluate the customer’s offer from financial viewpoint and discuss whether they should accept or reject the special offer. Note: show all workings.Feedastudent Ltd are developing a Gift food service for students. Market research has indicated that customers would be willing to pay £50 for the product. The company usually expect a profit margin of 10% on products. Fixed costs for marketing and promotion is expected to be £12,000 per year. The company expects orders for 3000 units this year. Food costs are expected to be £41 per unit. Packaging and administration costs are £2 per service. Required: a) Calculate whether Enterprise Ltd can expect to make a profit this year. b) A reduction in the fixed costs of £4,000 could be achieved but this would result in a reduction of expected sales to 2000 per year. Would this reduce the cost gap and be a more profitable solution? Alternatively, cheaper food costing only £38 could be used but this may affect its reputation and…
- Question 3: Target costing Enterprise Ltd are developing a new type of floor cleaner. Market research has indicated that customers would be willing to pay £130 for the product. The company usually expect a profit margin of 30% on products. Fixed costs for enhancements to production machinery are expected to be £150,000 per year and Quality assurance £50,000. The company is estimating an annual production volume of 50,000 and allocates overheads on the basis of number of units produced. Materials are expected to cost £56.45 per unit. Each product requires 2 and a half hours of specialist labour to manufacture and the average cost of labour is £14. Required: a) Explain the benefits of adopting a target costing approach at an early stage in the development process. b) Calculate the expected cost per unit of the new product and identify any cost gap that might exist. c) Assuming a cost gap was identified in the process, outline possible steps that could be taken to reduce this gap.Problem 2: The XYZ company collected recipes from members and published a cookbook. The book sells for $18 per copy. The company estimates that the club must sell 2000 books to breakeven on its $4,000 investment, What is the variable cost per unit assumed in this analysis?3. Buildz Manufacturing currently produces 1,000 tables per month. The following per unit data for 1,000 tables apply for sales to regular customers: Direct materials £50 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs 10 15 30 £105 The plant has capacity for 3,000 tables and is considering expanding production to 3,000 tables. What is the total cost of producing 3,000 tables? A) £255,000 B) £225,000 C) £175,000 D) £235,000
- Collyer Ltd has a valve division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 100,000 £30 £16 £9 The company has a pump Division that could use this valve in the manufacture of one of its pumps. The pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of £29 per valve. Required: 1. Assume that the valve Division has ample idle capacity to handle all of the Pump division's needs. What is the acceptable range, if any, for the transfer price between the two division? (5 marks) 2. Assume that the valve Division is selling all that it can produce to outside customers on the intermediate market. What is the acceptable range, if any, for the transfer price between the two divisions? (5 marks) 3. Assume that the valve Division is selling all that it can produce to outside customers on the…SAMMI Manufacturing has two divisions. Division A makes a part with the following characteristics: Production capacity in units 15,000 units Selling price to outside customers .. Variable cost per unit........ £25 £18 £60,000 Total fixed costs Division B, of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of £24 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division B continues to purchase parts from an outside supplier rather than from Division A, the company as a whole will be: a. b. C. d Better off by £15,000 each period. Worse off by £10,000 each period. Worse off by £30,000 each period. Worse off by £35,000 each period.An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeks Maximum delivery time: 3.5 weeks Normal usage: 52 000 units per year Purchase price per unit: R8.50 Cost of placing an order: R18.00 Interest rate: 2% per year Storing cost per unit: R2.50 a). Calculate the safety stock b). Calculate the lead time c). Calculate the EOQ. d). Calculate the re-order point if the organisation does not keep safety stock. e). Calculate the re-order point if the organisation has a policy to keep safety stock. f). Calculate the safety stock that should be kept by the organisation.
- An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeks Maximum delivery time: 3.5 weeks Normal usage: 52 000 units per year Purchase price per unit: R8.50 Cost of placing an order: R18.00 Interest rate: 2% per year Storing cost per unit: R2.50 a). Calculate the safety stock b). Calculate the lead timeQuestion iii) Han products manufacturing 40,000 units of part S-9 each year for use of its production line. A this level of activity, the cost per unit for part S-9 is given as follows : DM - $4.60; DL - $12; VMOH $3.60; FMOH $6. An outside supplier has offered to sell 40,000 units of part S-9 each year to Han products for $25 per part. If Han products accepts this offer, the facilities now being used to manufacturing part S-9 could be rented to another company at an annual rental of $80,000. However. Han products has determined that 2/3 of FMOH being applied to part S-9 would continue even if part S-9 were purchased from the outside supplier. Requirement: iii1. Calculate how much profit will increase/decrease if the outside supplier’s offer is accepted.1. Scent Fragrance Company manufactures and sells several ranges of perfumes. The Average revenue and cost of sales are as follows: Selling price per unit $20.00 Variable costs per unit: Direct materials $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 a) Calculate the contribution margin per unit. b) Calculate the number of units Scent Fragrance Company must sell each year to break even. c) Calculate the number of units Scent Fragrance Company must sell to yield a profit of $144,000.