Calculate the contribution to sales ratio for each product

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Question - XYZ Limited budgets to sell 3 products and has provided you with the following selling prices and variable costs:

Product

Sales Units

Selling Price per unit

Variable Cost per unit

 

 

N$

N$

X

600,000

10

5

Y

400,000

11

6

Z

1,000,000

6

3

Annual fixed costs are budgeted at N$4,000,000.

Required -

1. Calculate the total budgeted profit.

2. Calculate the contribution to sales ratio for each product.

3. Calculate the breakeven sales volume per product and in total.

4. How many units of each product and in total would XYZ Ltd need to sell to earn a total profit of N$6,000,000?

5. XYZ marketing manager is proposing to spend an extra N$400,000 on advertising and sales promotion of Product X. She is considering reducing the selling price of X to N$9 per unit, resulting in expected sales of 800,000 units. Evaluate the financial viability of this proposal.

Reference no: EM133068075

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