Assignment 4 XYZ Ltd will increase its production volume for Product A next year. The Management team wants to maintain next year's Profit Margin on Revenue ratio the same as current year. Management Team also wants to know if they can afford to hire a part-time Accounting Clark next year. As the Financial Analyst at XYZ Ltd., you are asked to analysis and make a recommendation based the available data and/or information below. Estimate salary of a part-time Accounting Clark is $25,000 per year Current Year Next Year Units Produced 2,000 increase by 50% Unit Selling Price $135 decrease by 5% Unit Production Cost $40 remain the same Annual Rent $5,000 landlord will increase rent by 3% Electricity in Kilowatt 120,000 increase by 60% due to increase in production volume Dollar /kilowatt of electricity $0.50 remain the same Salary $65,000 remain the same Administration $10,000 remain the same

Assume all units produced will be sold and Product A is the only product line. There is a separate electricity meter for the production plant. Ignore tax and depreciation Round answers to the nearest dollar Round answers to 1-decimal for percentage

Part 1 -- Complete the following: Identify all the Variable Cost Identify all the Fixed Cost What is the Profit Margin on Revenue each year? What is your recommendation on hiring a part-time Accounting Clark? And Why?

Part 2 - maximum 75 words To support the projected volume of Product A next year, the Production Manager has informed the Management Team that the company need to stock-up on raw materials. Supplier, Triple-A has all the raw materials required to manufacture Product A. Triple-A is Triple-A is willing to give 20% discount if XYZ would buy all the raw materials for Product A from them. What sources and forms of financing do you recommend XYZ to consider? Are there any risks associate with your recommendation(s)?

Answer rating: 100% (QA)

Part 1 The variable costs for Product A are the unit production cost and the electricity cost The fixed costs are the rent salary and administration c... View the full answer