View the step-by-step solution to:

Question

Coconut Plantations Pty Ltd management plans to

introduce detergents to their product range in 2019. They have provided the following information relating to their planned activities.


Candles Soaps Detergents


Sales mix (250 000 units) 75 000 50 000 125 000


Selling price $28 $45 $20


Variable cost/unit 18 27 12


Total fixed costs = $402 800


Required


1. Calculate the break-even point in total units and units per product based on the 2019 data.


2. Calculate the before tax profit (loss) that would be achieved in 2019 based on the above data.


3. Management is concerned about increasing competition for some of its products and wants to increase its sales of Soaps relative to Detergents. The initiative would increase annual fixed costs by $50 000 and alter the sales mix to 30 per cent for Candles, 30 per cent for Soaps and 40 per cent for Detergents. On the available data, would you recommend the initiative?

Top Answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question