Jackson Ltd has forecast annual demand for its Jumping Jack trampolines to be 5000 units at the current selling price of $200 per unit. For every $20 change in selling price it expects that demand will change by 500 units. Materials and direct labour costs of the trampolines are $120 per unit. Overheads at different volume levels are forecast to be: 2000 units: Total overheads = $210 000 4000 units: Total overheads = $300 000 6000 units: Total overheads = $390 000 Required: Calculate the selling price and volume that will maximise profits from the trampoline, and profits that will be achieved at this selling price and volume.
Jackson Ltd has forecast annual demand for its Jumping Jack trampolines to be 5000 units at the current selling price of $200 per unit. For every $20 change in selling price it expects that demand will change by 500 units. Materials and direct labour costs of the trampolines are $120 per unit. Overheads at different volume levels are forecast to be: 2000 units: Total overheads = $210 000 4000 units: Total overheads = $300 000 6000 units: Total overheads = $390 000 Required: Calculate the selling price and volume that will maximise profits from the trampoline, and profits that will be achieved at this selling price and volume.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jackson Ltd has
2000 units: Total overheads = $210 000
4000 units: Total overheads = $300 000
6000 units: Total overheads = $390 000
Required:
Calculate the selling price and volume that will maximise profits from the trampoline, and profits that will be achieved at this selling price and volume.
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