A summary of a manufacturing company's budgeted profit statement for its next financial year, when it...

    

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A summary of a manufacturing company's budgeted profit statement for its next financial year, when it expects to be operating at 75% of capacity, is given below: (NS) (NS) Sales 9 000 units at N$32 Less: Direct materials Direct wages Production overhead: 288 000 54 000 72 000 Fixed Variable 42 000 18 000 186 000 102 000 Gross Profit Less: Administration, selling And distribution costs Fixed 36 000 Varying with sales volume 27 000 63 000 Net profit 39 000 Required i. How can a company with multiple products use cost-volume-profit analysis? ii. How can sensitivity analysis be used in conjunction cost-volume-profit with analysis? iii. Identify and explain two assumptions on which cost-volume-profit analysis is based ii. Calculate the break-even point in units and in revenue v. It has been estimated that if the selling price per unit were reduced to £28, the increased demand would utilise 90% of the company's capacity. You are required to re-draft the statement using a marginal format to show the effect. A summary of a manufacturing company's budgeted profit statement for its next financial year, when it expects to be operating at 75% of capacity, is given below: (NS) (NS) Sales 9 000 units at N$32 Less: Direct materials Direct wages Production overhead: 288 000 54 000 72 000 Fixed Variable 42 000 18 000 186 000 102 000 Gross Profit Less: Administration, selling And distribution costs Fixed 36 000 Varying with sales volume 27 000 63 000 Net profit 39 000 Required i. How can a company with multiple products use cost-volume-profit analysis? ii. How can sensitivity analysis be used in conjunction cost-volume-profit with analysis? iii. Identify and explain two assumptions on which cost-volume-profit analysis is based ii. Calculate the break-even point in units and in revenue v. It has been estimated that if the selling price per unit were reduced to £28, the increased demand would utilise 90% of the company's capacity. You are required to re-draft the statement using a marginal format to show the effect.

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Ans i For costvolume profit analysis a multiproduct corporation employs dollars of sales as the volume measure A multiproduct company assumes a specific product mix or revenue mix for CVP reasons The ... View the full answer