PRODUCT Sales Price Direct material (imported) Direct labour and packaging Production overhead Budget sales (units)

Budget sales revenue total contribution Contribution over each euro of sales Priority of utilization contribution and imported raw materials

A 20 7 3 4 1500 30000 6 30.00% 2

B 40 16 4 5 2000 80000 15 37.50% 1

C 30 13 6 6 2000 60000 5 16.67% 3

D 20 10 4 5 1500 30000 1 5.00% 4

PRODUCT Budget sales (units) Budget sales revenue Production overhead (absorption) Total production overhead Fixed production overhead Production overhead (marginal)

A 1500 30000 4 6000 3000 2

B 2000 80000 5 10000 8000 1

C 2000 60000 6 12000 6000 3

D 1500 30000 5 7500 3000 3

total budget sales revenue total fixed production ove

PRODUCT Sales Price Direct material (imported) Direct labour and packaging Production overhead Budget sales (units) Budget sales revenue Total contribution Contribution over each euro of sales Priority of utilization contribution and imported raw materials

A 20 7 3 2 1500 30000 8 40.00% 2

B 40 16 4 1 2000 80000 19 47.50% 1

C 30 13 6 3 2000 60000 8 26.67% 3

D 20 10 4 3 1500 30000 3 15.00% 4

PRODUCT Sales Price Direct material (imported) Direct labour and packaging Production overhead sales(units) sales revenue

A 20 7 3 2 1000 20000

B 40 16 4 1 1000 40000

C 30 13 6 3 1000 30000

D 20 10 4 3 1000 20000

total 110 46 17 9 4000 110000

direct material consumed priority B sales(units) sales revenue direct material consumed priority A sales(units) sales revenue direct material consumed

7000

16000

13000

10000

46000

1000 20000 7000

2200 88000 35200

1000 30000 13000

1000 20000 10000

5200 158000 65200

1971 39420 13797

2200 88000 35200

1000 30000 13000

1000 20000 10000

6171 177420 71997

MOST PROFITABLE PRODUCTION PLAN PRODUCT Sales Price Direct material (imported) Direct labour and packaging Production overhead sales(units) cost of sales sales revenue

A 20 7 3 2 1971 23652 39420

B 40 16 4 1 2200 46200 88000

C 30 13 6 3 1000 22000 30000

D 20 10 4 3 1000 17000 20000

total 110 46 17 9 6171 108852 177420

Profit and Loss account Sales Cost of sales Gross margin Less: Fixed production overhead Administration expenses Distribution expenses Sales commission Financial expenses Net profit 19900 5700 17742 800 177420 108852 68568 20000 48568

44142 4426

ratio total budget sales revenue total fixed production overhead 200000 20000 10

from exhibit 3 88000/sales price of B= 88000/40

Given 72000-65200=971 additional units added to A

PRODUCT Sales Price Cost of sales Contribution Contribution (after commission) Sales (units) Sales revenue

A 20 12 8 6 1971 39420

B 40 21 19 15 2200 88000

C 30 22 8 5 1000 30000

D 20 17 3 1 1000 20000

total 110 72 38 27 6171 177420

Fixed cost=expenses-commission+fixed production overhead F.C=44142-17742+20000 46400 Break even point in sales revenue= fixed cost/ C.M ratio 46400/(27/110) 189037 euros 46400/27 1719 units

Break even point in sales unit=

If we produce minimum 1000 units PRODUCT Sales Price Direct material (imported) sales(units) direct material consumed sales revenue

A 20 7 1971 13797 39420

B 40 16 2200 35200 88000

C 30 13 1000 13000 30000

D 20 10 1000 10000 20000

total 110 46 6171 71997 177420

If we are not restricted to 1000 units PRODUCT Sales Price Direct material (imported) sales(units) raw material consumed sales revenue OPPORTUNITY COST=

A 20 7 2671 18697 53420

B 40 16 2500 40000 100000

C 30 13 1000 13000 30000

D 20 10 0 0 0

total 110 46 6171 71697 183420

183420-177420 6000 euros

PRODUCT Sales Price Direct material (imported) Direct labour and packaging Production overhead Cost of sales total contribution Contribution over each euro of sales Priority of utilization contribution and imported raw materials

A 27 7 3 2 12 15 0.556 1

B 47 16 4 1 21 26 0.553 2

C 37 13 6 3 22 15 0.405 3

D 27 10 4 3 17 10 0.370 4