JK Limited has prepared a budget for the next 12 months when it intends to make and sell four products, details of which are shown below:

Budgeted fixed costs are £240 000 per annum and total assets employed are £570 000.
You are required:
(a) To calculate the total contribution earned by each product and their combined total contributions;
(b) To plot the data of your answer to (a) above in the form of a contribution to sales graph (sometimes referred to as a profit-volume graph) on the graph paper provided;
(c) To explain your graph to management, to comment on the results shown and to state the break-even point;
(d) To describe briefly three ways in which the overall contribution to sales ratio could be improved.

Transcribed Image Text:

Sales in units Selling price Variable cost (thousands)per un Product (E) per unit () 10 10 50 20 14.00 8.00 4.20 7.00 20 40 10