You are the financial manager of a small ice cream company, planning to launch a new product.
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Question:
You are the financial manager of a small ice cream company, planning to launch a new product. This is a small chocolate-coated ice cream, produced as a boxed unit containing 24 ice creams.
A) Using the following information, determine what would be the minimum number of units to be made each month:
- Selling price per unit - £15
- Variable costs per unit - £10
- Fixed costs per month - £6,000
Costing
- Calculations and explanation of each step
- Dealing with overheads – full absorption costing and other costing methods.
- Justification of the chosen method
- Break-even – calculation and explanation
- Interpretation and explanation of the results
B) If the company finds that it is able to produce 2,000 units per month, what would be the new breakeven selling price? As a consequence, propose a selling price to the company directors for their next meeting, providing detailed reasons to justify your proposal.
Costing and pricing
- Break-even – calculation and explanation
- Pricing – cost plus, marginal cost, price takers etc. Evaluate the use of different costing methods for pricing purposes
- Marginal costing
Related Book For
Accounting for Governmental and Nonprofit Entities
ISBN: ?978-0073379609
15th Edition
Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus
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