Q1

1. As the new management accountant employed by a company you have been asked to supply financial results by product line to help in marketing decision making. The following account was produced for the year ended 30^th June 2022.

		GH000	GH000
Sales			1,200
Cost of goods sold:
	Materials	500
	Wages	300
	Production expenses	150
Marketing cost		100
			1,050
Net profit			150

A statistical analysis of the figures shows the following variable element in the costs:

	(%)
Materials	90
Wages	80
Production expenses	60
Marketing costs	70

Below is given, as percentages, the apportionment of the sales, and the variable elements of the costs among the five products manufactured.

	Products					Total
	A	B	C	D	E
Sales	30	15	7	28	20	100
Materials	40	20	10	20	10	100
Wages	15	25	10	25	25	100
Production expenses	30	10	10	30	20	100
Marketing costs	10	30	20	30	10	100

From the information given:

1. Prepare a statement for the year showing contribution by products and comment on these contributions.
2. Calculate the following:

1. The break-even sales level
2. The orders of sales preference for additional orders to maximize contribution as a percentage of sales.
3. A revised sales mix of the GH1,200,000 sales to maximize contribution assuming that existing sales by products can only be varied 10% either up or down.
4. A product mix to maximize contribution if manpower availability were reduced by 10% but the product mix could be varied by up to 20%.
5. The percentage commission which could be offered to an overseas agent on an order of GH30,000 worth each of product A, C and E and obtain a 20% contribution on the total sales value.

Q2

1. Distinguish between the following terms.

1. Structural cost driver and executional cost driver
2. Management control and operational control