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(Answered)-Can you help me on the first question? Compute the unit sales


Can you help me on the first question??

Compute the unit sales price at which Mini Bike must sell its product in the current year in order to earn a budgeted target profit of ?200,000?

I don't know how to use the increase pourcentage because I don't have the first price of?material cost per unit,
Assessment of Performance ? Case study:

 

The Mini Bike Manufacturing Corporation manufactures and sells mini bikes. The

 

corporation?s condensed

 

1) income statement for the year at 31 December 2015 follows:

 


 

Sales (200,000 units)

 

Cost of goods sold

 

Gross margin

 

Selling expenses

 

Administrative

 

expenses

 

Net profit

 


 

?1,000,000

 

?600,000

 

?400,000

 

?150,000

 

?100,000

 

?150,000

 


 

The Mini Bike?s budget committee has estimated the following changes for 2016:

 

30% increase in number of units sold

 

20% increase in material cost per unit

 

15% increase in direct labor cost per unit

 

10% increase in variable indirect cost per unit

 

5% increase in indirect fixed costs

 

8% increase in selling expenses, arising solely from increased volume

 

6% increase in administrative expenses, reflecting anticipated higher wage and supply

 

price levels

 

Any changes in administrative expenses caused solely by increased sales volume are

 

considered immaterial.

 

Because inventory qualities remain fairly constant, the budget committee considered

 

that for budget purposes any change in inventory valuation can be ignored. The

 

composition of the cost of a unit of finished product during 2015 for materials, direct

 

labor and manufacturing support, respectively, was in the ratio or 3:2:1.

 

In 2015, ?40,000 of manufacturing support was for fixed costs. No changes in

 

production methods or credit policies were contemplated for 2016.

 


 


 


 


 


 

Compute the unit sales price at which Mini Bike must sell its product in the

 

current year in order to earn a budgeted target profit of ?200,000. (5 points)

 

Calculate a value in response to the following: Unhappy about the prospect of a

 

price increase, Mini Bike?s sales manager would like data regarding the number

 

of units that must be sold at the former price to earn the ?200,000 profit (5

 

points).

 

Calculate a value in response to the following: Believing that an estimated

 

increase in sales is overly optimistic, a company director is requesting data

 

predicting annual profit if the selling price calculated above is adopted but the

 

change in sales volume only amounts to a 10% increase (10 points).

 


 

 


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