Determine sales volume and sales revenue for the company

Assignment Help Corporate Finance

Reference no: EM13902638

Gafat Engineering Ethio Plc manufactures two types of TV sets - LCD and CRT - both having only one model. The LCD and CRT television sets sell for Br 9,000 and Br5,000, respectively. The company sells its products through its own stores and other outlets. Total fixed expenses are Br15,000,000 per month. Variable expenses and monthly sales data are given below:

LCD CRT

Variable expenses Br5,000 Br2,000

Monthly sales in units 2,000 3,000

Required: (unless stated figures should be computed for one month)

a) Determine breakeven total volume of sales and sales volume for each product.

b) Determine sales volume and sales revenue for the company to earn Br500,000 profit after 30% profit tax.

c) The company has planned to incur Br 200,000 monthly selling (promotional) expenses to increase sales volume for its LCD TV sets to 4,000. If the plan materializes and other things remain constant, determine breakeven sales volume and sales revenue for the company.

d) The company has planned to buy new and improved technology that reduces variable production expenses for its LCD TV set to Br4,000 while increasing its monthly fixed production costs by Br500,000. If the plan materializes and other things remain constant, determine breakeven sales volume and sales revenue for the company.

e) If the company is guaranteed with total sales volume of 10,000 TV sets in a given month, should it go for option "c" or "d" above given that sales mix remained constant as provided in each of the two options? Why? What if the guaranteed total sales volume of 7,000 instead of 10,000? Why? What should be the guaranteed total sales volume for the two options to provide equal profit to the company?

Reference no: EM13902638

Questions Cloud

How does internal control improve financial reporting : Explain the importance of separation of duties to a system of internal controls. How does internal control improve financial reporting?

Record the exchange assuming caleb paid : (1) Record the exchange assuming Caleb paid $ 30,000 cash and the exchange has commercial substance.

Discuss where and when surveillance cameras are acceptable : Discuss where and when surveillance cameras are acceptable

How a firm check its advertising-to-sales ratio is not high : How can a firm check that its advertising-to-sales ratio is not too high or too low?

Determine sales volume and sales revenue for the company : Determine breakeven total volume of sales and sales volume for each product. Determine sales volume and sales revenue for the company to earn Br500,000 profit after 30% profit tax.

The adjustments are normal for this machine : Rizio Co. purchases a machine for $12,500, terms 2/10, n/60, FOB shipping point.

What is the correct rule for the marginal advertising dollar : Why is it incorrect to advertise up to the point that the last dollar of advertising expenditures generates another dollar of sales? What is the correct rule for the marginal advertising dollar?

How does tying differ from bundling : How does mixed bundling differ from pure bundling? Under what conditions is mixed bundling preferable to pure bundling? Why do many restaurants practice mixed bundling (by offering a complete dinner as well as an à la carte menu) instead of pure b..

Cala manufacturing purchases a large lot : Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant.

User Account

All Pages