(d) G L prod revealed the following data: Selling price per unit Variable cost p
ID: 2658661 • Letter: #
Question
(d) G L prod revealed the following data: Selling price per unit Variable cost per unit Fixed cost Existing capacity Required: Calcualte uces and sells single product with a standard quality. An analysis of its costing records GHS40 GHS20 GHS120,000 16,000 units (i) Break-even point in units and in value (ii) Number of units to be sold to get a profit of GHS60,000 (iii) If fixed cost is reduced by GHS20,000 and results in 10% reduction in variable cost, what would be the net profit for the existing sales capacity? (iv) The selling price to be charged to show a profit of GHS60,000 on sales of 16,000 units. (v) Additional sales volume to meet GHS16,000 additional fixed cost.Explanation / Answer
d) i) Break Even Point In units = Fixed Cost/ (Selling Price per unit - Variable Cost per Unit) =120,000/(40 -20) = 6000
Break Even Point in value = Breakeven Point * sales price = 6000 * 40 = 240,000
ii) No of Units to be sold for profit of 60,000
No of units * (Sales price - Variable Costs) - Fixed Costs =No of Units * ( 40 -20) - 120,000 = 60,000
No of Units = (60000+ 120,000)/(20) = 180,000/20 = 9000
iii)New Fixed Cost = 120,000 -20,000 = 100,000
New Variable Cost = 20 * ( 1-10%) = 18
Net Profit = 16000 * ( 40 -18) - 100,000 = 252,000
iv) No of Units of Sales = 16,000
Profit = 60,000
Profit = 16,000 * ( Sales Price - 20) - 120,000 = 60,000
Sales Price = 180,000/(16,000) + 20 = 31.25
v)New Fixed Costs = 120,000 + 16,000 = 136,000
Sale Volume = Fixed Cost/ (Selling Price per unit - Variable Cost per Unit) =136,000/(40 -20) = 6800
Additional Sales volume = 6800 -6000 = 800
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