Lupin Ltd manufactures three types of cleaning materials; Ram, Rap and Rag. The selling prices are...

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Lupin Ltd manufactures three types of cleaning materials; Ram, Rap and Rag. The selling prices are TAS 180, TAS 70 and TAS 30 for each of Ram, Rap and Rag respectively. Variable costs per unit as a percentage of selling price are 60%, 50% and 30% for each of Ram, Rap and Rag respectively. Annual fixed costs on the three materials amount to TAS 980,000. Lupin Ltd is subject to an income tax rate of 35% on its profits. Unit sales for the year 2018 are expected to be 4600 units for Ram, 2300 units for Rap and 1150 units for Rag. The selling pricing of the three materials was a subject of controversy in one of the management meetings. This is because the selling prices of these materials are higher than the average market price of similar materials .The three materials were launched in the year 2017. However the finance manager clarified that Lupin would make a loss if the materials were priced in-line with the prevailing market prices of similar materials. Instead a full cost price pricing strategy was adopted for the launch. Required: (a) Determine Lupin's breakeven point (in units) for the year 2018. (b) Determine the breakeven point (in units) for each material for the year 2018. (c) What volume of sales (in units and TAS) for each material must Lupin Ltd achieve to earn a net profit of TAS 153,400 after tax in 2018? Lupin Ltd manufactures three types of cleaning materials; Ram, Rap and Rag. The selling prices are TAS 180, TAS 70 and TAS 30 for each of Ram, Rap and Rag respectively. Variable costs per unit as a percentage of selling price are 60%, 50% and 30% for each of Ram, Rap and Rag respectively. Annual fixed costs on the three materials amount to TAS 980,000. Lupin Ltd is subject to an income tax rate of 35% on its profits. Unit sales for the year 2018 are expected to be 4600 units for Ram, 2300 units for Rap and 1150 units for Rag. The selling pricing of the three materials was a subject of controversy in one of the management meetings. This is because the selling prices of these materials are higher than the average market price of similar materials .The three materials were launched in the year 2017. However the finance manager clarified that Lupin would make a loss if the materials were priced in-line with the prevailing market prices of similar materials. Instead a full cost price pricing strategy was adopted for the launch. Required: (a) Determine Lupin's breakeven point (in units) for the year 2018. (b) Determine the breakeven point (in units) for each material for the year 2018. (c) What volume of sales (in units and TAS) for each material must Lupin Ltd achieve to earn a net profit of TAS 153,400 after tax in 2018?

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