Reference no: EM132326003
Question
Green Ltd manufactures and sells a single product. The initial budget for the forthcoming period is:
$
Material 20,000
Labour(1/3fixed) 18,000
Variableproductionoverheads 8,000
Fixedproductionoverheads 8,000
Sales overheads(50%fixed) 4,000
58,000
The standard selling price is $90 per unit and tax rate is at 28%. Sales for the period are budgeted to be 800 units. The maximum production capacity for the period is 1,500 units.
Required: with solution method:
(a) Calculate:
o the profit after tax at budgeted sales level;and
o the amount of sales unit required in order to earn a profit after tax of $18,000 for the period.
(b) Compute:
o if Green Ltd reduced the selling price to $80, which will enable 1,000 units to be sold, how much is the profit aftertax?
o the amount of sales unit required in order to earn a profit after tax of $18,000 for the period.