Menegai Ltd manufactures three products whose average sales units are provided below:…

Menegai Ltd manufactures three products whose average sales units are provided below:

Don't use plagiarized sources. Get Your Custom Essay on
Menegai Ltd manufactures three products whose average sales units are provided below:…
Just from $13/Page
Order Essay
Product Sales units (‘000’)
A 500
B 1,000
C 400

Additional Information:
1. The unit selling price of products A and B are Kshs. 30 and Kshs. 20 respectively.
2. Products A and B have a variable cost to sales ratio of 40%.
3. Product C has a contribution margin ratio of 37.5% and a variable cost of Kshs. 25 per unit.
4. Fixed costs are currently Kshs. 1,800,000 per annum.
5. The company intends to increase the expenditure on promotion and advertising on product A by Kshs. 800,000 and reduce its selling price to either Kshs. 25 or Kshs. 20. The estimated sales increase as result of the price reduction will be 800,000 units and 1,200,000 units for unit selling price of Kshs. 25 and Kshs. 20 respectively.

Attachments:

Leave a Reply

Your email address will not be published.

*

*

*