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For Period Wilson Ltd has produced the following budget figures for Product X:
For the period, the budgeted fixed overhead is Rs100,000 and the budgeted sales are 12,000 units.
a) Determine the budgeted profit for Period 1. b) Determine ( nearest whole unit): (i) The Break Even Point (units) (ii) The Margin of Safety (units)
c) The sales manager has suggested the given three options for the next period and has asked for an evaluation:
1) Reduce the selling price to Rs 75 per unit. This will increase sales by 2,000 units. Labour costs will increase by Rs 2 per unit and fixed overheads will decrease by Rs 10,000.
2) Increase the selling price to Rs 85 per unit. This will decrease sales by 4,000 units and decrease fixed overheads by Rs 10,000.
3) Reduce the selling price to Rs 70 per unit. This will increase sales by 5,000 units, increase fixed overheads by Rs 12,000 and decrease direct materials costs by Rs 3 per unit.
Hart Corporation''s sailri
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