QUESTION2 A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00Variable Production cost per unit R8.60Fixed production costs R650 000Fixed selling and distribution costs R230 400Sales commission 5% of selling priceSales 90 000 units RequiredThe marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales commission is increased to 8% percent of selling price and a further R10 000 is speny on advertisingCalculate the revised breakeven point based on the marketing managers suggestion

Answered: A company manufactures a single…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION2

A company manufactures a single product. Budget and Standard cost details for next year include:

Selling Price per unit R24.00

Variable Production cost per unit R8.60

Fixed production costs R650 000

Fixed selling and distribution costs R230 400

Sales commission 5% of selling price

Sales 90 000 units

Required

The marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales commission is increased to 8% percent of selling price and a further R10 000 is speny on advertising
Calculate the revised breakeven point based on the marketing managers suggestion

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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