Question 2: Learning Goal #2 (08 Marks):

Hammoud would like to start a business and went to the bank to borrow, and he provided the bank with the expected income list for the first year of its activity as follows:

Statement	Amounts
Sales (20,000 units)		300000
Variable industrial costs	100000
Fixed industrial costs	50000
Variable sales expenses	30000
Fixed selling expenses	30000
Variable administrative expenses	10000
Fixed administrative expenses	60000
Net profit		20000

Bank's Director is not convinced by the realism of the estimates for the first year of this type of business activity, and has made the following observations:

Reducing the sales level by 20% from the planned level is more realistic.

If sR 6,000 can be excluded from fixed sales costs by wholesale with commission payments, variable sales expenses will increase to 15% of the sale price.

.

A 50% increase in the number of units sold can be achieved by reducing the unit's selling price to Sar 12.

Required:

If the data estimated by Hammoud is correct, select the break-even point in units, value, and security margin ratio with the comment.

.

Prepare the income list on the basis of the contribution taking into account the bank manager's note (1) with the comment.

.

Find a break-even point taking into account the bank manager's note (2), and compare it with the desired result (a) with the comment.

.

Calculating the impact on net profit taking into account the note of Manager No. 3, assuming that fixed and variable sales expenses are original (estimated by Hammoud).