JK Limited has prepared a budget for the next 12 months when it intends to make...

  

 

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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: Variable cost Selling price per unit (£) Sales in units Product (thousands) per unit (£) 10 20 14.00 K 10 40 8.00 50 4 4.20 M 20 10 7.00 Budgeted fixed costs are £240000 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; (2 marks) (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 provided3; I (c) to explain your graph to management, to comment on the results shown and to state the break-even point; (6 marks) (4 marks) (d) to describe briefly three ways in which the overall contribution to sales ratio could be improved. (3 marks) CIMA Stage 2 Cost Accounting 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: Variable cost Selling price per unit (£) Sales in units Product (thousands) per unit (£) 10 20 14.00 K 10 40 8.00 50 4 4.20 M 20 10 7.00 Budgeted fixed costs are £240000 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; (2 marks) (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 provided3; I (c) to explain your graph to management, to comment on the results shown and to state the break-even point; (6 marks) (4 marks) (d) to describe briefly three ways in which the overall contribution to sales ratio could be improved. (3 marks) CIMA Stage 2 Cost Accounting