Sweet and Sour Ltd manufactures and sells three products, the selling price and variable cost price are given as:

                           Duck     Shrimp        Rice
                          €                    €              €
Sale price          5.00          2.60        6.00

Variable costs  2.40         1.40          2.80

Current years sales volumes:

Duck 30,000 pieces
Shrimps 16,000 pieces
Rice 12,000 pieces

Sweet and Sour Ltd now has neither profit nor loss.

Wanted

(a) Calculate Sweet and Sour Ltd’s fixed costs for the year.

It has been said that if the sale of shrimps is stopped, the sales of Duck will increase by 20%, and there will also be an increase in the sales of Rice by 5%.

(b) Calculate whether the above suggestion is feasible on the basis of your numerical calculations, to accept the suggestion

Answer rating: 100% (QA)

a Calculating fixed costs We know that Sweet and Sour Ltd is currently making neither profit nor los... View the full answer