Derek Lowe decided to commence as a manufacturer making a single product. As a matter of business policy he set the following conditions for his firsttwo yearsof operations: Year 1 To at least brake-even,but also if possible to achieve a return on his capital employed at 5% per annum.
Year 2 Through increase efficiency to lower the break-even point and to achieve a return on his capital employ at 15% per annum.His forecast net capital employed is: £Year I 100,000Year II 500,000
Additional Information:(1) His projected cost per unit produced are:
Year I Year II £ £Direct Materials 10 11Direct Labour 8 7Variable prod. overheads 5 4.5Variable sales overhead 4 3.5
(2) He expected that his fixed costs would remain constant throughout the two years at£60,000 per annum
(3)His Forecast sales are: Price per unit Unit Volume £ 000sYear I 34 10Year II 36 13
(4) It can be ssumed that all expense and revenue relationships will be unvhaged expect where identified(5) All Output Produced will be sold
Required(a)A detailed profit and loss statement showing his projected profit for year I (4marks)
(b) A calculation of the number of sales units necessary to break-even for each year (4marks)
(c)A graph showing break-even charts for each year. Indicate the break-even points on the graph (7marks)
(d) A calculation of the number of sales unites necessary to acheive the target return on capital employed for each of the first two years of operation (7marks)
(e) If lowe decided to aim to maintain his Year II target return on capital employed at an output of 14,000 units, what is the minimum selling price he should charge (3marks)

Total (25 marks)i need help with these questions

About this Question

Answered

Approved

Dec 08, 2020

Tutor

GET INSTANT HELP/h4>

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

• As a reference for in-depth understanding of the subject.
• As a source of ideas / reasoning for your own research (if properly referenced)
• For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).

This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.