a) An organization has provided the following information. Units 20,000 10,000 40,000 Required: i. Compute the...

 

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a) An organization has provided the following information. Units 20,000 10,000 40,000 Required: i. Compute the fixed costs and the variable cost per unit using the high-low range method (6 marks) The company wants to increase the units to 80,000. Estimate the total cost at this level of activity (3 marks) Discuss why it is important to split the total cost into the variable and fixed component (4 marks) b) A company manufactures a single product. Budget and standard cost details for next year include: i. ii. iii. iv. V. vi. Sales and production units Required: i. ii. Total cost 3,000,000 2,000,000 5,000,000 iii. Selling price per unit Variable production cost per unit Fixed production costs Fixed selling and distribution costs Shs 2,400 Shs 860 Shs 650,000 Shs 230,400 Estimated sales commission per unit sold 5% of selling price 90,000 units Calculate the break-even point (in units and amount) (4 marks) Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss. (4 marks) The marketing manager has suggested that the selling price per unit can be increased to Shs 2,500 if the sales commission is increased to 8 per cent of selling price and a further shs 100,000 is spent on rent. Required: Calculate the revised break-even point based on the marketing manager's suggestion. (4 marks) (Total: 25 marks) a) An organization has provided the following information. Units 20,000 10,000 40,000 Required: i. Compute the fixed costs and the variable cost per unit using the high-low range method (6 marks) The company wants to increase the units to 80,000. Estimate the total cost at this level of activity (3 marks) Discuss why it is important to split the total cost into the variable and fixed component (4 marks) b) A company manufactures a single product. Budget and standard cost details for next year include: i. ii. iii. iv. V. vi. Sales and production units Required: i. ii. Total cost 3,000,000 2,000,000 5,000,000 iii. Selling price per unit Variable production cost per unit Fixed production costs Fixed selling and distribution costs Shs 2,400 Shs 860 Shs 650,000 Shs 230,400 Estimated sales commission per unit sold 5% of selling price 90,000 units Calculate the break-even point (in units and amount) (4 marks) Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss. (4 marks) The marketing manager has suggested that the selling price per unit can be increased to Shs 2,500 if the sales commission is increased to 8 per cent of selling price and a further shs 100,000 is spent on rent. Required: Calculate the revised break-even point based on the marketing manager's suggestion. (4 marks) (Total: 25 marks)

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a HighLow Range Method i Compute the fixed costs and the variable cost per unit using the highlow range method Lets assume the units and total costs are as follows Units 20000 10000 40000 Total Cost 3... View the full answer