PART A FOUR QUESTIONS ANSWER TWO Question 1 a) A Company budgets for a production of 170000 units. The variable cost per unit is Ghc16 and fixed cost per unit is Ghc.4 per unit. The company fixes the selling price to fetch a profit of 20% on cost. Required, a. What is the break-even point? b. What is the profit/volume ratio? AP (3) AP (3) c. If the selling price is reduced by 5%, how does the revised selling price affect the Break Even Point and the Profit/Volume Ratio? AP (3) d. If profit increase of 10% is desired more than the budget, what should be the sales at the reduced price? AP (3) Major Topic Break Even Analysis b) Blooms Designation Score AP 3 x 4 A factory engaged in manufacturing plastic toys is working at 40% capacity and produces 10, 000 toys per month. The present cost break-up for one toy is as under. Material: Ghc.10 Labor: Ghc.3 Overheads: Ghc.5 [60% fixed] The selling price is Ghc.20 per toy. If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At 90% capacity, the selling price falls by 5% accompanied by a similar fall in the price of material. You are required to prepare a statement showing the profits/losses at 40%, 50% and 90% capacity utilizations. Major Topic Blooms Designation Score Budgeting and budgetary control AP 3+3+ 3