Assignment
Discipline:
Accounting
Type of service:
Essay
Spacing:
Double spacing
Paper format:
Harvard
Number of pages:
1 page
Number of sources:
0 source
Paper details:
Assignment
Fundamentals of management accounting
Answer the following questions:
- The launch of a new product is under consideration. It’s unit variable costs will be £30 and it is estimated that incremental fixed costs of £250,000 will be incurred if production is commenced. Forecast sales are 50,000 units. At what level of price for the new product will the organization break even? If the actual planned selling price is £48 per unit, what will be the organization’s margin of safety?
- The following information is about two organizations, A and B.
| Organisation A | Organization B | |
| £ | £ | |
| Fixed costs | 60,000 | 12,000 |
| Variable costs per unit | 0.20 | 0.50 |
| Unit selling price | 0.60 | 0.60 |
| Expected sales levels (units) | 160,000 | 160,000 |
- Which firm has higher operating gearing?
- What is the expected net income of both firms?
- What would be expected net income to be for both firms if sales were a) 140,000 units and b) 180,000 units?
- Which firm is facing more risk in terms of its current sales predictions?
Be sure to demonstrate your numerical workings.
