Kerrigan Ltd makes and sells product A. The current selling price is £11 and the total of variable costs per unit is £6. The fixed costs of production are £350,000 and the company currently sells 75,000 units. Required: (a) Calculate the break-even point (in units and revenues) of product A for Kerrigan Ltd. ] (b) Calculate the profit made on sales of 75,000 units. [] (c) The company will make an advertising campaign costs £10,000 and will improve the product specifications, which will increase the variable cost per unit by £1. This is expected to allow the company to increase the selling price to £13 and the sales is expected to be 80,000 unites. Calculate the new profit figure for the improved product.
Kerrigan Ltd makes and sells product A. The current selling price is £11 and the total of variable costs per unit is £6. The fixed costs of production are £350,000 and the company currently sells 75,000 units. Required: (a) Calculate the break-even point (in units and revenues) of product A for Kerrigan Ltd. ] (b) Calculate the profit made on sales of 75,000 units. [] (c) The company will make an advertising campaign costs £10,000 and will improve the product specifications, which will increase the variable cost per unit by £1. This is expected to allow the company to increase the selling price to £13 and the sales is expected to be 80,000 unites. Calculate the new profit figure for the improved product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kerrigan Ltd makes and sells product A. The current selling price is £11 and the total of variable costs per unit is £6. The fixed costs of production are £350,000 and the company currently sells 75,000 units.
Required:
(a) Calculate the break-even point (in units and revenues) of product A for Kerrigan Ltd. ]
(b) Calculate the profit made on sales of 75,000 units. []
(c) The company will make an advertising campaign costs £10,000 and will improve the product specifications, which will increase the variable cost per unit by £1. This is expected to allow the company to increase the selling price to £13 and the sales is expected to be 80,000 unites. Calculate the new profit figure for the improved product.
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