QUESTION 3 (10 marks) Plastique Pty Ltd sells only one type of plastic...
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Accounting
QUESTION 3 (10 marks)
Plastique Pty Ltd sells only one type of plastic container for multi-purpose packaging. Data relating to the product for 2019 are as follows:
| Number of Units sold | 45 000 |
| Selling Price per unit | $26 |
| Variable Manufacturing Cost per unit | $8 |
| Variable Selling Cost per unit | $4.50 |
| Annual Fixed Non-Manufacturing Cost | $80 000 |
| Annual Fixed Manufacturing Cost | $265 600 |
The CEO of Plastique currently is under pressure from the shareholders to increase profits to
$432 000 in 2020.
- If annual fixed costs manufacturing costs increased by $60,000 and the company can choose to increase the price by 10% or decrease variable manufacturing cost per unit by 25% to compensate the decrease in profits. Which decision would maximise the profit of the company? Assume the number of units sold are 45 000.
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