2.2.Total Marginal Income and Net Profit/Loss of each proposal. 2.3. Break-even quantity of each proposal. INFORMATION- The following budgeted information for the month ended 31 December 2021 was provided by Glasfit Ltd for a product produced from one of its projects: Sales (30 000 units X R10 per unit) R300 000 Total variable costs (30 000 units X R4.50 per unit) R135 000 Total fixed costs R66 000 Net profit R99 000 The profit forecast is less than what was hoped for. The sales manager suggested two proposals to improve the position: Proposal A involves launching a new marketing campaign. This would involve additional fixed costs of R16 500 for advertising. Sales volume is expected to increase to 33 000 units, with no change in the unit selling price and variable costs. Proposal B involves a R1 per unit reduction in the selling price. Fixed costs will reduce by R9 000. The sales volume is expected to be 35 000 units.
2.2.Total Marginal Income and Net
2.3. Break-even quantity of each proposal.
INFORMATION- The following budgeted information for the month ended 31 December 2021 was provided by Glasfit Ltd for
a product produced from one of its projects:
Sales (30 000 units X R10 per unit) R300 000
Total variable costs (30 000 units X R4.50 per unit) R135 000
Total fixed costs R66 000
Net profit R99 000
The profit
to improve the position:
Proposal A involves launching a new marketing campaign. This would involve additional
fixed costs of R16 500 for advertising. Sales volume is expected to increase to 33 000 units,
with no change in the unit selling price and variable costs.
Proposal B involves a R1 per unit reduction in the selling price. Fixed costs will reduce by
R9 000. The sales volume is expected to be 35 000 units.
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