ZCOMPANY has budgeted that output and sales of his single product will be 100000 units...
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Accounting
ZCOMPANY has budgeted that output and sales of his single product will be units in the coming year. At this level of activity, his unit variable costs are budgeted at Sh and his unit fixed costs at Sh His sales manager estimates that the demand for the product would increases by units for every decreased of Sh in unit selling price and vice versa and that at a unit selling price of Sh demand would be nil. Information about two price increases has just been received from suppliers: one is for materials which are included in Alvis Kiptoos variable costs and one is for fuel which included in his fixed costs Their effect will be to increase both the variable and fixed costs by each over the budgeted figures. Calculate the cost contribution and profit at the budgeted levels of units. Calculate the level of sales at which profits would be maximized and the amounts of these maximum profits before the cost increases. Show whether and by how much ZCOMPANY should adjust his selling price in respect to increases in: Fuel costs Material costs
ZCOMPANY has budgeted that output and sales of his single product will be units in the coming year. At this level of activity, his unit variable costs are budgeted at Sh and his unit fixed costs at Sh His sales manager estimates that the demand for the product would increases by units for every decreased of Sh in unit selling price and vice versa and that at a unit selling price of Sh demand would be nil.
Information about two price increases has just been received from suppliers: one is for materials which are included in Alvis Kiptoos variable costs and one is for fuel which included in his fixed costs Their effect will be to increase both the variable and fixed costs by each over the budgeted figures.
Calculate the cost contribution and profit at the budgeted levels of units.
Calculate the level of sales at which profits would be maximized and the amounts of these maximum profits before the cost increases.
Show whether and by how much ZCOMPANY should adjust his selling price in respect to increases in:
Fuel costs
Material costs
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