Night Garden Ltd has two divisions: Iggle and Piggle. Each division produced and sold 1 line of
Question:
Night Garden Ltd has two divisions: Iggle and Piggle. Each division produced and sold 1 line of product only. The latest financial results of these divisions are presented below. In the current year Iggle and Piggle manufactured and sold 25,000 units and 20,000 units respectively.
Required:
Calculate the break-even point and margin of safety (as a percentage) of both businesses. Conclude on what the results of these calculations tell you about the performance of both businesses. (Max word-count: 100 – for discussion part only) |
(9 Marks) |
Calculate the number of units the Piggle division would have to manufacture and sell to achieve a £60,000 profit. Clearly identify 3 (THREE) other considerations – including the limitations of Cost-volume-profit (CVP) analysis, that the Piggle division would have to consider when planning to increase its volume? Discuss each identified consideration clearly linking with plan to increase volume. (Max word-count: 200 – for discussion part only) |
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso