Question ONE

1. The accountants model for CVP analysis is based on a number of assumptions, to what extent are these assumptions valid?
2. A company makes a single product with the selling price of UGX. 20,000 and unit variable cost of UGX. 12,000. Fixed costs incurred include production costs of UGX. 40,000,000 and administrative costs of UGX.20,000,000.

Required:

1. Calculate the number of units to break even.
2. Contribution sales ratio
3. Sales at break-even point

Question TWO

1. What are the most important features that distinguish marginal costing from absorption costing?
2. NS&M Ltd. produces and sells a single product to its customers. The following data were extracted from the books of the company covering the month of December 2015.

	UGX.
Annual fixed costs	10,000,000
Expected selling price per unit	20,000
Variable cost per unit:
Production cost	9,000
Selling and distribution	7,000
A profit of UGX. 2,000,000 is planned

Required:

1. How many units should be produced and sold to make the plan possible?
2. Determine the amount of sales that can be made to get the profit above.